Investing.com - U.S. natural gas prices edged lower on Tuesday, as weather forecasts for early December pointed to mild temperatures, dampening near-term heating demand expectations.
Natural gas for delivery in January on the New York Mercantile Exchange dipped 1.4 cents, or 0.65%, to trade at $2.221 per million British thermal units during U.S. morning hours.
Natural gas futures have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on winter heating demand.
Prices of the fuel typically rise ahead of the winter as colder weather sparks heating demand. But a mild start to the winter heating season underlined concerns over a deepening supply glut, sending prices to four-year lows near $2.00 per million British thermal units at the end of October.
On Monday, natural gas rose 2.3 cents, or 1.04%, on expectations this week's storage data will show the first withdrawal of the season.
The Energy Information Administration's next storage report slated for release on Thursday is expected to show a drawdown of approximately 5 billion cubic feet for the week ending November 27.
That compared with a withdrawal of 22 billion cubic feet in the same week last year, while the five-year average change for the week is a draw of 11 billion cubic feet.
Total U.S. natural gas storage stood at an all-time high of 4.009 trillion cubic feet, 13.8% higher than levels at this time a year ago and 6.3% above the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter’s unusually strong demand.
Inventories of the gas are typically built up during the warm summer months and then drawn down in the winter as cold temperatures increase demand for the fuel.
Elsewhere on the Nymex, crude oil for delivery in January shed 38 cents, or 0.92%, to trade at $41.27 a barrel, while heating oil for January delivery inched up 0.56% to trade at $1.361 per gallon.