Natural Gas Futures Sink 4% as Forecasts Turn Milder

Investing.com – Natural gas futures fell sharply on Wednesday, as updated weather forecasting models called for milder weather, which should dampen demand for the heating fuel.

Front-month U.S. tumbled 13.0 cents, or around 4.1%, to $3.065 per million British thermal units (btu) by 9:10AM ET (1410GMT), after hitting a three-week low of $3.022 earlier in the session.

The commodity rose almost 0.9% on Tuesday as traders reacted to a blast of cold weather which upped demand for the heating fuel.

But fresh models released overnight showed that temperatures won’t be as cold as previously expected through both the upcoming six- to 10-day and eight- to 14-day periods.

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.

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.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.