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Natural gas futures fall more than 2% on warmer outlook

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Investing.com -

Investing.com - U.S. natural gas prices fell more than 2% on Monday, amid speculation the end of the winter heating season will bring warmer temperatures throughout the U.S. and cut into demand for the fuel.

On the New York Mercantile Exchange, natural gas for delivery in May tumbled 6.7 cents, or 2.45%, to trade at $2.647 per million British thermal units during U.S. morning hours.

Futures were likely to find support at $2.583, the low from April 1, and resistance at $2.719, the high from April 2.

There was no settlement in natural gas futures on Friday as markets were closed for the start of the Easter holiday.

Updated weather forecasting models for the lower 48 U.S. states showed that temperatures will remain near-normal over the next two weeks.

Market experts warned that futures are likely to remain vulnerable in the near-term as the coldest part of the winter has effectively passed and below-normal temperatures in April mean less than they do in January and February.

Spring usually sees the weakest demand for natural gas in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.

The heating season from November through March is the peak demand period for U.S. gas consumption.

Approximately 49% of U.S. households use natural gas for heating, according to the Energy Department.

Indications that supplies are more than ample to meet demand also weighed.

Total U.S. natural gas storage stood at 1.461 trillion cubic feet as of last week, 75.4% above year-ago levels and 11.5% below the five-year average for this time of year.

Last spring, supplies were 55% below the five-year average, indicating producers have made up for most of last winter's unusually strong demand.

The Energy Information Administration's next storage report slated for release on April 9 is expected to show a build of approximately 5 billion cubic feet for the week ending April 3.

Supplies fell by 8 billion cubic feet in the same week last year, while the five-year average change is a decline of 2 billion cubic feet.

Elsewhere on the Nymex, crude oil for delivery in May rallied $1.17, or 2.38%, to trade at $50.31 a barrel, while heating oil for May delivery jumped 2.21% to trade at $1.719 per gallon.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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