Natural gas futures dropped on Wednesday after updated weather forecasting models predicted milder temperatures to edge out a cold air mass that froze a good portion of the U.S. this week.
On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD4.248 per million British thermal units during U.S. trading, down 1.20%. The commodity hit session high of USD4.365 and a low of USD4.238.
The February contract settled 0.16% lower on Tuesday to end at USD4.299 per million British thermal units. Natural gas futures were likely to find support at USD4.208 per million British thermal units, Friday''s low, and resistance at USD4.447, the high from Dec. 31.
A blast of record-setting cold air will give way to milder temperatures across much of the central and eastern U.S. this week, which allowed natural gas prices to fall on expectations for homes and business to throttle back on their heating.
Losses were somewhat limited on forecasts for a return of below-normal temperatures by mid January.
While the cold snap may be less severe as the current weather system, temperatures may dip low enough to hike demand for heating once the mild snap ends.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Meanwhile, U.S. supply levels remained in focus. Early withdrawal estimates for Thursday’s storage report range from 140 billion cubic feet to 230 billion cubic feet, compared to a drop of 191 billion cubic feet during the same week a year earlier. The five-year average change for the week is a decline of 131 billion cubic feet.
Total U.S. natural gas storage stood at 3.071 trillion cubic feet as of last week, approximately 16% below last year''s unusually high level and nearly 9% below the five-year average for this time of year.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February were down 0.89% and trading at USD92.84 a barrel, while heating oil for February delivery were down 0.12% and trading at USD2.9558 per gallon.