Investing.com - U.S. natural gas futures fell sharply on Friday, as a break in the cold to milder weather prompted a correction in the market after a rapid price run-up which took prices to a four-year high earlier in the week.
On the New York Mercantile Exchange, natural gas futures for delivery in March slumped to a session low of USD4.721 per million British thermal units, before trimming losses to settle at USD4.943, down 1.36%.
The March contract plunged 8.31% on Thursday to settle at USD5.011 per million British thermal units. Prices rallied 10.61% on Wednesday to end at USD5.477, the highest since January 2010.
Natural gas futures were likely to find support at USD4.721 per million British thermal units, the low from January 31 and resistance at USD5.198, the high from January 27.
On the week, Nymex natural gas prices lost 4.61%, the first weekly decline in three weeks. Prices still posted a monthly increase of nearly 13%.
Natural gas futures were pressured on Friday after updated weather forecasting models pointed to moderating temperatures that would curb demand for the heating fuel.
Temperatures are expected to warm following the arctic chill that settled through most of the nation during January.
Bearish speculators spent the session betting that milder weather will decrease demand for the heating fuel. 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.
The U.S. Energy Information Administration said Thursday that natural gas supplies dropped by 230 billion cubic feet in the week ended January 24.
Total U.S. natural gas storage stood at 2.193 trillion cubic feet as of last week, approximately 17% below the five-year average for this time of year.
Natural-gas inventories have fallen by nearly 40% since November 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.
Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers increased their bullish bets in natural gas futures in the week ending January 28.
Net longs totaled 171,029 contracts, up 9.6% from net longs of 154,643 in the previous week.
Elsewhere in the energy complex, light sweet crude oil futures for March delivery settled at USD97.49 a barrel by close of trade on Friday, up 0.87% on the week.
Meanwhile, heating oil for March delivery lost 4.43% on the week to settle at USD2.998 per gallon by close of trade Friday.