Investing.com – Natural gas futures fell sharply on Monday, giving back some of last week’s strong gains, as updated weather forecasting models called for milder weather, which should dampen demand for the heating fuel.
Front-month U.S. slumped 9.2 cents, or around 2.9%, to $3.083 per million British thermal units (btu) by 8:00AM ET (1300GMT).
The commodity soared about 10% last week, as traders reacted to a blast of cold weather which upped demand for the heating fuel.
Natural gas prices typically rise during the winter months as colder weather sparks indoor-heating demand. The heating season from November through March is the peak demand period for U.S. gas consumption.
But updated weather models released over the weekend showed that the western, central, and southern parts of the country will be milder than normal through Feb. 11, as high pressure dominates.
The northeast will remain cold, but with brief milder breaks between weather systems.
Meanwhile, market participants looked ahead to this week’s due on Thursday, which is expected to show a draw in a range between 90 and 110 billion cubic feet (bcf) in the week ended Jan. 26.
That compares with a decline of 288 bcf in the preceding week, a fall of 87 bcf a year earlier and a five-year average drop of 160 bcf.
Total natural gas in storage currently stands at 2.296 trillion cubic feet (tcf), according to the U.S. Energy Information Administration. That figure is 519 bcf, or around 18.4%, lower than levels at this time a year ago and 486 bcf, or roughly 17.5%, below the five-year average for this time of year.
A recent blast of cold weather across parts of the U.S. over the past few weeks has resulted in unusually strong storage withdrawals for natural gas, bringing storage levels to the low end of a five-year range.
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