Investing.com - Natural gas futures came under heavy selling pressure during U.S. morning trade on Monday, extending losses from the previous session as milder weather forecasts continued to weigh on future demand expectations for the fuel.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.492 per million British thermal units during U.S. morning trade, dropping 2.1%.
It earlier fell by as much as 2.65% to trade at USD2.478 per million British thermal units, the lowest since May 15.
The June contract is due to expire at the end of trading on Tuesday, May 29.
Meanwhile, the more actively traded contract for July delivery fell 2.8% to trade at USD2.554 per million British thermal units. The July contract tumbled by as much as 3.2% earlier to trade at a nine-day low of USD2.530.
Trading is expected to be subdued on Monday, as floor trading on the NYMEX will remain closed for the Memorial Day holiday.
Natural gas prices lost more than 3% on Friday after forecasters from the Commodity Weather Group predicted normal or below-normal temperatures in the eastern half of the U.S. from May 30 through June 3.
Industry group Weather Derivatives said in a report Friday that cooling demand in the U.S. could be 18% below normal from May 31 through June 4.
Weather service provider AccuWeather said that the high temperature in New York on June 2 was expected to be 68 degrees Fahrenheit (20 Celsius), 8 degrees below normal, after rising to as high as 83 Fahrenheit on May 28, 9 degrees above normal.
Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use. Average or below-average summer temperatures decrease the need for gas-fired electricity to cool homes, dampening demand for natural gas.
Natural gas prices have been on the decline since mid-last week, losing more than 9% in the past three sessions. Technical traders noted that upward price movement seemed stalled, with the market unable to break above a three-month high of USD2.750 hit on May 18.
Despite the recent losses, sentiment on the fuel has improved in recent weeks. Prices are up more than 30% since hitting a decade-low of USD1.902 on April 19, amid indications major North American natural gas producers were cutting back on production.
Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas provided further support over recent weeks. However, market players noted that sustained prices back above USD2.50 and toward the USD3.00-level likely would inspire some switching back to coal.
Meanwhile, some traders remained concerned over elevated U.S. storage levels. The U.S. Energy Information Administration said last week that natural gas storage in the U.S. rose by 77 billion cubic feet 2.744 trillion cubic feet last week, 38% above the same week a year earlier and 38% higher than the five-year average.
Early injection estimates for this week’s storage data range from 63 billion cubic feet to 90 billion cubic feet, compared to last year's build of 89 billion cubic feet. The five-year average change for the week is an increase of 100 billion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in July rose 0.6% to trade at USD91.39 a barrel, while heating oil for July delivery added 0.4% to trade at USD2.843 per gallon.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.492 per million British thermal units during U.S. morning trade, dropping 2.1%.
It earlier fell by as much as 2.65% to trade at USD2.478 per million British thermal units, the lowest since May 15.
The June contract is due to expire at the end of trading on Tuesday, May 29.
Meanwhile, the more actively traded contract for July delivery fell 2.8% to trade at USD2.554 per million British thermal units. The July contract tumbled by as much as 3.2% earlier to trade at a nine-day low of USD2.530.
Trading is expected to be subdued on Monday, as floor trading on the NYMEX will remain closed for the Memorial Day holiday.
Natural gas prices lost more than 3% on Friday after forecasters from the Commodity Weather Group predicted normal or below-normal temperatures in the eastern half of the U.S. from May 30 through June 3.
Industry group Weather Derivatives said in a report Friday that cooling demand in the U.S. could be 18% below normal from May 31 through June 4.
Weather service provider AccuWeather said that the high temperature in New York on June 2 was expected to be 68 degrees Fahrenheit (20 Celsius), 8 degrees below normal, after rising to as high as 83 Fahrenheit on May 28, 9 degrees above normal.
Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use. Average or below-average summer temperatures decrease the need for gas-fired electricity to cool homes, dampening demand for natural gas.
Natural gas prices have been on the decline since mid-last week, losing more than 9% in the past three sessions. Technical traders noted that upward price movement seemed stalled, with the market unable to break above a three-month high of USD2.750 hit on May 18.
Despite the recent losses, sentiment on the fuel has improved in recent weeks. Prices are up more than 30% since hitting a decade-low of USD1.902 on April 19, amid indications major North American natural gas producers were cutting back on production.
Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas provided further support over recent weeks. However, market players noted that sustained prices back above USD2.50 and toward the USD3.00-level likely would inspire some switching back to coal.
Meanwhile, some traders remained concerned over elevated U.S. storage levels. The U.S. Energy Information Administration said last week that natural gas storage in the U.S. rose by 77 billion cubic feet 2.744 trillion cubic feet last week, 38% above the same week a year earlier and 38% higher than the five-year average.
Early injection estimates for this week’s storage data range from 63 billion cubic feet to 90 billion cubic feet, compared to last year's build of 89 billion cubic feet. The five-year average change for the week is an increase of 100 billion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in July rose 0.6% to trade at USD91.39 a barrel, while heating oil for July delivery added 0.4% to trade at USD2.843 per gallon.