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Natural gas futures tumble to 5-week low on demand outlook

Published 05/12/2014, 10:01 AM
Natural gas futures hit five-week low on weaker demand outlook

Investing.com - Natural gas futures declined for the fourth consecutive session on Monday to hit a five-week low, as updated weather forecasting models continued to call for slightly warmer than normal temperatures over the next 15 days.

On the New York Mercantile Exchange, natural gas for delivery in June fell to a session low of $4.455 per million British thermal units, the weakest level since April 7.

Natural gas last traded at $4.469 during U.S. morning hours, down 1.38%, or 6.2 cents. The June contract lost 0.9%, or 4.1 cents on Friday to settle at $4.531 per million British thermal units.

Futures were likely to find support at $4.446 per million British thermal units, the low from April 7 and resistance at $4.598, the high from May 9.

Natural gas prices continued their recent downward trend as spring and fall see the weakest demand for the fuel in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.

Updated weather forecasting models called for warmer-than-average weather over much of the Midwest and Northeast, as well as the South, which was likely to lower heating demand.

Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.

Meanwhile, total U.S. natural gas storage stood at an 11-year low of 1.055 trillion cubic feet as of last week. Stocks were 797 billion cubic feet less than last year at this time and 982 billion cubic feet below the five-year average of 2.037 trillion cubic feet for this time of year.

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Producers would need to add 2.6 trillion to 2.9 trillion cubic feet to storage by November 1 to meet typical winter demand, analysts said.

Elsewhere on the Nymex, U.S. crude oil for delivery in June rose 0.6%, or 60 cents, to trade at $100.59 a barrel, while heating oil for June delivery advanced 0.3% to trade at $2.915 per gallon.

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