Natural gas futures plunge to 3-month low on warm January weather

Natural gas futures fell more than 3% on Wednesday to trade at a three-month low, 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 USD3.228 per million British thermal units during U.S. morning trade, down 3.65% on the day.

It earlier fell by as much as 4.5% to trade at a session low of USD3.190 per million British thermal units, the weakest level since September 26.

Updated weather forecasts released Tuesday 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.

The U.S. National Weather Service’s six-to-10 outlook called for above-normal temperatures for a little more than the eastern half of the nation, with below-normal readings in the West.

Bearish speculators are betting on the mild 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.

Meanwhile, investors remained concerned over bloated U.S. inventory levels. Total U.S. natural gas stockpiles stood at 3.652 trillion cubic feet as of last week, 2.5% higher than last year at this time and 13% above the five-year average.

Early withdrawal estimates for this week’s storage data range from 100 billion cubic feet to 141 billion cubic feet.

Inventories fell by 77 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 111 billion cubic feet.

The EIA report will be released on Friday, a day later than usual due to the New Year holiday.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February rallied 1.85% to trade at USD93.51 a barrel, while heating oil for February delivery rose 0.85% to trade at USD3.056 per gallon.

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Natural gas plummets as forecasts point to warmer weather

Natural gas futures tanked on Monday after meteorologists tweaked their forecasts for the next two weeks to the warmer side.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD3.374 per million British thermal units, down 2.72%.

Recent forecasts calling for cold weather to return in January moderated somewhat Monday.

Weather service provider MDA Weather said that it expected temperatures to warm up in the coming days through the second week of January.

Natural gas futures are very sensitive to weather reports in the U.S. winter.

The heating season from November through March sees peak demand for U.S. gas.

About half of U.S. households use gas for heating purposes, according to Energy Department data.

Meanwhile, U.S. natural gas storage fell less than expected in the week before last, official data revealed on Friday, though weather forecasts served as the market’s chief weather vane.

In a report, the Energy Information Administration said that U.S. natural gas storage fell by 72 billion cubic feet last week to 3.652 trillion cubic feet, less than a decline of 82 billion cubic feet in the preceding week.

Analysts had expected U.S. natural gas storage to fall 76 billion cubic feet last week, though markets focused more on weather forecasts

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February were up 0.83% and trading at USD91.55 a barrel, while heating oil for February delivery were up 0.41% and trading at USD3.0337 per gallon.

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