Natural gas futures were lower during U.S. morning trade on Monday, as market players focused on shifting weather forecasts over the next few weeks to gauge the strength of early-winter U.S. heating demand.
Prices came under additional pressure as investors cashed out of the market to lock in gains from a recent rally that took prices to a three-week high earlier in the session. On the New York Mercantile Exchange, natural gas futures for delivery in December traded at USD3.776 per million British thermal units during U.S. morning trade, shedding 0.35%. Prices traded in a range between USD3.752 per million British thermal units, the daily low and a session high of USD3.834 per million British thermal units, the strongest level since October 29. Updated weather forecasts released earlier showed that warmer-than-normal temperatures will descend on the U.S. in the next three-to-five days, with mostly seasonally normal weather the following week. Bearish speculators are betting on the warm weather reducing early-winter demand for the heating fuel. Forecasts originally called for colder-than-average weather during the period. The heating season from November through March is the peak demand period for U.S. gas consumption. Some profit taking also weighed after front-month natural gas prices surged 7.5% last week after a U.S. government report showed the first gas supply withdrawal of the winter heating season. The U.S. Energy Information Administration said that that natural gas storage in the U.S. fell by 18 billion cubic feet last week. It was the earliest seasonal decline since 2007. Last year, stocks rose by 20 billion cubic feet, while the average rise in the week over the previous five years was 17 billion cubic feet. Total U.S. gas supplies stood at 3.911 trillion cubic feet. Stocks are 5.6% above the five-year average for the week. In March, after an exceptionally warm winter, stockpiles were approximately 60% above five-year levels. Early withdrawal estimates for this week’s storage data range from a drawdown of 5 billion cubic feet to 23 billion cubic feet. Inventories rose by 9 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 3 billion cubic feet.