Investing.com - U.S. natural gas futures edged lower in light pre-New Year holiday trade on Wednesday, as market players took profits on a recent rally which took prices to near a two-year peak.
Natural gas for February delivery on the New York Mercantile Exchange dipped 3.5 cents, or 0.93%, to $3.739 per million British thermal units by 9:40AM ET (14:40GMT).
Prices rallied by around 20.0 cents, or 6%, over the past two trading sessions amid colder forecasts for January.
Trading volumes are expected to remain light this week due to the holiday period as many investors already closed books before the end of the year, reducing liquidity in the market, which could exaggerate market moves.
Market participants awaited weekly storage data due on Thursday, which is expected to show a draw in a range between 220 and 233 billion cubic feet in the week ended December 23.
If correct, that would be the biggest draw for the week since at least 1994.
That compares with a withdrawal of 209 billion cubic feet in the preceding week, 58 billion a year earlier and a five-year average drop of 80 billion cubic feet.
Total natural gas in storage currently stands at 3.597 trillion cubic feet, according to the U.S. Energy Information Administration, 5.9% lower than levels at this time a year ago and 2.1% above the five-year average for this time of year.
Analysts forecast the amount of gas in storage would fall below weekly five-year averages by year-end for the first time since May 2015.
Meanwhile, updated weather forecasting models predicted that portions of the West and northern U.S. will be hit with rain, snow and slightly cool temperatures over the next few days.
Looking ahead, Artic air is expected into the West and then spreading south and east in the first week of January, boosting demand expectations for the heating fuel.
Natural gas prices typically rise during the winter as colder weather sparks indoor-heating demand. About half of U.S. homes use natural gas for heating.
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