Investing.com - U.S. natural gas futures fell sharply on Friday, as a break in the cold to milder weather prompted a correction in the market after a rapid price run-up which took prices to a four-year high earlier in the week.
On the New York Mercantile Exchange, natural gas futures for delivery in March slumped to a session low of USD4.739 per million British thermal units, the weakest since January 31, before trimming losses to settle at USD4.775, down 3.16%.
The March contract tumbled 1.97% on Thursday to settle at USD4.931 per million British thermal units. Prices rallied to USD5.737 on Wednesday, the highest since January 2010.
Natural gas futures were likely to find support at USD4.652 per million British thermal units, the low from January 27 and resistance at USD5.018, the high from February 7.
On the week, Nymex natural gas prices lost 3.39%, the second consecutive weekly decline.
Natural gas futures were pressured on Friday after updated weather forecasting models pointed to moderating temperatures that would curb demand for the heating fuel.
Temperatures are expected to warm following the arctic chill that settled through most of the nation during January.
MDA Weather Services said it expects a "more aggressive warm up" in the Midwest by late next week, while a "more substantial warmth" will build over the central U.S. in its 11- to 15-day forecast.
Bearish speculators spent the session betting that milder weather will decrease demand for the heating fuel.
The heating season from November through March is the peak demand period for U.S. gas consumption. Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.
The U.S. Energy Information Administration said Thursday that natural gas supplies dropped by 262 billion cubic feet in the week ended January 31, compared to expectations for a decline of 270 billion cubic feet.
Total U.S. natural gas storage stood at 1.923 trillion cubic feet as of last week, approximately 22% below the five-year average for this time of year and nearly 29% below last year’s unusually high level.
Natural-gas inventories have fallen sharply since November as frigid winter temperatures in the U.S. led households to burn a higher than normal amount of the fuel in furnaces to heat their homes.
Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers reduced their bullish bets in natural gas futures in the week ending February 4.
Net longs totaled 151,338 contracts, down 11.5% from net longs of 171,029 in the previous week.
Elsewhere in the energy complex, light sweet crude oil futures for March delivery settled at USD99.88 a barrel by close of trade on Friday, up 2.39% on the week.
Meanwhile, heating oil for March delivery picked up 1.64% on the week to settle at USD3.048 per gallon by close of trade Friday.