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Natural gas futures retreat 2% on warm January weather

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Investing.com - Investing.com - Natural gas futures fell more than 2% in pre-Christmas trade during U.S. morning hours on Monday, as forecasts showing warmer-than-normal weather across most parts of the U.S. in January weighed on sentiment.

Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts on winter heating demand.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD3.394 per million British thermal units during U.S. morning trade, tumbling 2.5%.

It earlier fell by as much as 2.9% to trade at a session low of USD3.382 per million British thermal units, the weakest level since December 20.

Trading on the NYMEX will close at 13:30EST (18:30GMT) ahead of the Christmas holiday on Tuesday.

Updated weather forecasts released over the weekend showed that warmer-than-normal weather was expected across key parts of the U.S. during the first two weeks of January, dampening sentiment on the heating fuel.

Weather service provider MDA Weather said it expected above-average temperatures in the heavily populated U.S. Northeast from December 26 through January 7.

According to AccuWeather, the low temperature in New York on December 30 was expected to be 29 degrees Fahrenheit (2 Celsius), 1 degree higher than usual.

Bearish speculators are betting on the seasonally-normal weather reducing winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.

The heating fuel has lost nearly 14% since touching a 14-month high of USD4.001 per million British thermal units on November 26, on speculation that temperatures won't be cold enough to erase a surplus of the fuel in storage.

Meanwhile, investors remained concerned over bloated U.S. inventory levels. The U.S. Energy Information Administration said last week that natural gas storage in the U.S. fell by 82 billion cubic feet to a total of 3.724 trillion cubic feet.

Stocks are 2% higher than last year at this time and 10% above the five-year average for this time of year.

Early withdrawal estimates for this week's storage data range from 66 billion cubic feet to 83 billion cubic feet.

Inventories fell by 87 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 140 billion cubic feet.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February shed 0.25% to trade at USD88.43 a barrel, while heating oil for February delivery dipped 0.45% to trade at USD2.997 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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