Investing.com - Natural gas futures hit another ten-year low Tuesday, as the bearish sentiment on the heating fuel remained intact amid ongoing concerns over elevated U.S. storage levels.
On the New York Mercantile Exchange, natural gas futures for delivery in May traded at USD2.035 per million British thermal units during U.S. afternoon trade, tumbling 3.39%.
Futures have been hitting a string of fresh 10-year lows in the past two weeks.
Natural gas prices have plunged almost 21% since the beginning of March and are down nearly 31% since the start of 2012 as market sentiment has been dominated by concerns over elevated U.S. storage levels and mild winter weather that has limited demand for the fuel.
Weekly storage data from the U.S. released last week showed that natural gas storage in the U.S. rose by 42 billion cubic feet last week, the third consecutive seasonal injection of natural gas for the year.
Total U.S. natural gas storage stood at 2.479 trillion cubic feet as of last week, 56% above year-ago levels and 61% higher than the five-year average for this time of year.
U.S. gas inventories ended the winter at a record high 2.5 trillion cubic feet, about 60% above normal and well above the previous March 31 high of 2.148 trillion set in 1983.
Natural gas traders expect the near-term downtrend in prices to continue amid indications demand for the heating fuel will remain weak in the near-term.
Industry weather group MDA Federal said in report Monday that it warmer weather was expected to return to the eastern U.S. next week.
According to the weather group, temperatures may rise 8 to 14 degrees Fahrenheit (4.4 to 7.8 Celsius) above normal throughout the East from April 14 to April 18.
The U.S. gas market is entering the so-called shoulder season. Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.
Some market analysts expect prices to drop even further and test the USD2.00-level in the coming weeks amid expectations gas stockpiles will continue to rise throughout the next few months as demand weakens.
Early injection estimates for this week’s storage data range from 11 billion cubic feet to 45 billion cubic feet, compared to last year's build of 7 billion cubic feet. The five-year average change for the week is an increase of 22 billion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in May plunged 1.42% to trade at USD101.00 a barrel.