Investing.com - Natural gas futures came under pressure during U.S. morning trade on Tuesday, following a long holiday weekend as traders readjusted positions ahead of the expiration of the front-month June contract.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.532 per million British thermal units during U.S. morning trade, dropping 1%.
It earlier fell by as much as 2.65% to trade at USD2.480 per million British thermal units, the lowest since May 15.
The June contract is due to expire at the end of Tuesday’s trading session. Contract expiration often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.
Meanwhile, the more actively traded contract for July delivery fell 1.2% to trade at USD2.595 per million British thermal units. The July contract tumbled by as much as 3.2% earlier to trade at a two-week low of USD2.537.
Floor trading on the NYMEX remained closed Monday for the Memorial Day holiday. The previous days’ transactions will be booked with Tuesday’s trades for settlement purposes.
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, cooler weather forecasts weighed on the commodity after meteorologists 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 last Friday that cooling demand in the U.S. could be 18% below normal from May 31 through June 4.
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.
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 0.55% to trade at USD91.36 a barrel, while heating oil for July delivery added 0.4% to trade at USD2.844 per gallon.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.532 per million British thermal units during U.S. morning trade, dropping 1%.
It earlier fell by as much as 2.65% to trade at USD2.480 per million British thermal units, the lowest since May 15.
The June contract is due to expire at the end of Tuesday’s trading session. Contract expiration often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.
Meanwhile, the more actively traded contract for July delivery fell 1.2% to trade at USD2.595 per million British thermal units. The July contract tumbled by as much as 3.2% earlier to trade at a two-week low of USD2.537.
Floor trading on the NYMEX remained closed Monday for the Memorial Day holiday. The previous days’ transactions will be booked with Tuesday’s trades for settlement purposes.
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, cooler weather forecasts weighed on the commodity after meteorologists 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 last Friday that cooling demand in the U.S. could be 18% below normal from May 31 through June 4.
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.
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 0.55% to trade at USD91.36 a barrel, while heating oil for July delivery added 0.4% to trade at USD2.844 per gallon.