Investing.com - U.S. natural gas futures fell sharply on Friday,
as investors cashed out of the market to lock in gains from a
recent rally after data showed that U.S. natural gas supplies fell
broadly in line with market expectations last week.
On the New York Mercantile Exchange, natural gas futures for
delivery in February plunged 2.41% on Friday to settle the week at
USD4.368 per million British thermal units. Nymex gas prices fell
to a session low of USD4.332 per million British thermal units
earlier, the weakest level since December 19.
Natural gas futures were likely to find support at USD4.280 per
million British thermal units, the low from December 19 and
resistance at USD4.578, the high from December 23.
The February contract inched up 0.16% on Thursday to settle at
USD4.476 per million British thermal units. On the week, Nymex
natural gas prices declined 2.21%, the first weekly loss in eight
The U.S. Energy Information Administration said in its weekly
report released Friday that natural gas supplies dropped by 177
billion cubic feet in the week ended December 20, in line with
Inventories fell by 74 billion cubic feet in the same week a year
earlier, while the five-year average change for the week is a
decline of 125 billion cubic feet.
Total U.S. natural gas storage stood at 3.071 trillion cubic feet
as last week, approximately 16% below last year's unusually high
level and nearly 9% below the five-year average for this time of
Early withdrawal estimates for this week's storage data range from
110 billion cubic feet to 150 billion cubic feet, compared to a
drop of 126 billion cubic feet during the same week a year earlier.
The five-year average change for the week is a decline of 121
billion cubic feet.
Meanwhile, market players continued to focus on winter weather
forecasts to gauge the strength of heating demand for the fuel.
Updated weather forecasting models called for chilly temperatures
across the East Coast of the U.S. during the next six-to-ten days.
Colder-than-average winter temperatures increase the need for
gas-fired electricity to heat homes, boosting demand for natural
gas. The heating season from November through March is the peak
demand period for U.S. gas consumption.
Natural gas prices have been well-supported in recent months, as
chilly early winter weather helped drive prices to a two-and-a-half
year high of USD4.578 on December 23. Natural gas prices are on
track to end the year with a gain of nearly 23%.
Elsewhere in the energy complex, light sweet crude oil futures for
February delivery settled at USD100.32 a barrel by close of trade
on Friday, up 0.99% on the week.
Meanwhile, heating oil for January delivery climbed 1.63% on the
week to settle at USD3.075 per gallon by close of trade Friday.
Trading volumes are expected to remain light in the week ahead,
with many markets closed for the New Year's holiday, reducing
liquidity in the market and increasing the volatility.
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