Natural gas futures drop 3% despite Northeast blizzard

Investing.com - U.S. natural gas prices fell sharply on Monday, despite forecasts for heavy snowfall in the heavily populated Northeast region over the next two days.

On the New York Mercantile Exchange, natural gas for delivery in March tumbled 6.8 cents, or 2.3%, to trade at $2.890 per million British thermal units during U.S. morning hours, after hitting a daily low of $2.821.

On Friday, natural gas surged 13.1 cents, or 4.63%, to settle at $2.958.

Futures were likely to find support at $2.762 per million British thermal units, the low from January 22, and resistance at $2.967, the high from January 23.

The National Weather Service said that the storm would bring heavy snow, powerful winds and widespread coastal flooding through Tuesday.

A blizzard warning was issued for a 250-mile stretch of the Northeast. The storm is centered just north of New York City but will extend from Philadelphia to Canada.

However, earlier forecasts of up to 3 feet of snow have been downgraded to 18-24 inches, which market analysts said contributed to Monday's losses.

Natural gas prices have been extremely volatile in recent sessions as investors react to daily changes in weather patterns. Futures have either gained or declined more than 5% in eight of the past ten trading days.

Nymex natural gas prices lost 14.1 cents, or 4.5%, last week, capping the eighth weekly decline in the past nine weeks.

Prices are down almost 35% since mid-November as an unusually mild start to winter limited demand while production soared.

Natural gas storage in the U.S. fell by 216 billion cubic feet last week, below expectations for a decline of 227 billion and compared to a drop of 236 billion in the preceding week.

Total U.S. natural gas storage stood at 2.637 trillion cubic feet, 8.2% above year-ago levels and 5.5% below the five-year average for this time of year.

Elsewhere on the Nymex, crude oil for delivery in March tacked on 7 cents, or 0.15%, to trade at $45.66 a barrel, while heating oil for March delivery inched up 0.93% to trade at $1.636 per gallon.