Investing.com - U.S. natural gas futures fell to the lowest level in more than three years on Wednesday, as market participants looked ahead to fresh weekly information on U.S. gas inventories to gauge the strength of demand for the fuel.
Natural gas for delivery in November on the New York Mercantile Exchange hit an intraday low of $2.396 per million British thermal units, a level not seen since June 2012, before trading at $2.401 during U.S. morning hours, down 7.5 cents, or 3.03%.
A day earlier, natural gas futures tacked on 3.4 cents, or 1.39%, as a cold blast hit the U.S. Northeast, boosting near-term demand expectations for the heating fuel.
However, futures gave back those gains after updated forecasting models showed that unseasonably warm readings will spread throughout most of the country next week.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early-winter heating demand.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Meanwhile, the U.S. Energy Information Administration's next storage report due on Thursday is expected to show a build of approximately 90 billion cubic feet for the week ending October 16.
That compares with builds of 100 billion cubic feet in the prior week, 94 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 84 billion cubic feet.
U.S. natural gas supplies stood at 3.733 trillion cubic feet, 13.6% higher than during the same week a year earlier and 4.7% above the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter’s unusually strong demand.
Stockpiles are set to reach a record by the end of this month. The EIA sees storage levels peaking at 3.956 trillion in November, which would top the November 2012 high of 3.929 trillion.
Elsewhere on the Nymex, crude oil for delivery in December shed 82 cents, or 1.77%, to trade at $45.47 a barrel, while heating oil for November delivery dipped 0.07% to trade at $1.447 per gallon.