Investing.com - Natural gas futures slumped on Wednesday after investors braced for a warming trend across the eastern U.S. in March, which should prompt households to throttle back on heating and curb demand for the commodity.
On the New York Mercantile Exchange, natural gas futures for delivery in April traded at $4.547 per million British thermal units during U.S. trading, down 2.57%. The commodity hit session high of $4.721 and a low of $4.533.
The April contract settled up 3.90% on Tuesday to end at $4.667 per million British thermal units.
Natural gas futures were likely to find support at $4.463 per million British thermal units, Monday's low, and resistance at $4.736, Monday's high.
Profit taking sent natural gas prices falling on market perceptions that the coldest part of winter has passed, while warmer spring temperatures lie just around the corner.
Spring and fall see the weakest demand for natural gas in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.
Forecasts for mild weather in the coming two weeks sent prices falling as well, though pockets of below-normal temperatures in parts of the northern reaches of the country cushioned losses somewhat.
In its 8-14 day outlook, Natgasweather.com called for a cold blast for the northern U.S. with reinforcing cold blasts to follow.
The southern U.S. will see moderate and slightly above-normal temperatures though cold snaps will appear as well.
The western U.S. will see warmer-than-normal conditions.
Meanwhile, traders looked ahead to Thursday’s supply report, amid expectations for a larger-than-average drop in U.S. natural gas inventories.
Early withdrawal estimates range from 140 billion cubic feet to 174 billion cubic feet, which is mostly above the year-ago draw of 149 billion cubic feet and well above the five-year average draw of 105 billion.
Total U.S. natural gas storage stood at 1.348 trillion cubic feet as of last week, the lowest for this time of year since 2004, following a withdrawal of 95 billion cubic feet.
Natural gas prices rallied to a more than five-year high of $6.493 per million British thermal units on February 20 as frigid winter temperatures in the U.S. led households to burn a higher than normal amount of the fuel in furnaces to heat their homes.
The heating season from November through March is the peak demand period for U.S. gas consumption. Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in April were down 1.32% and trading at $101.97 a barrel, while heating oil for April delivery were down 1.11% and trading at $3.0071 per gallon.