Investing.com - U.S. natural gas prices plunged sharply on Monday, as weather forecasts predicted temperatures across the U.S. would not be as cold as previously thought, dampening near-term demand expectations for the heating fuel.
On the New York Mercantile Exchange, natural gas for delivery in February tumbled 12.0 cents, or 3.85%, to trade at $3.007 per million British thermal units during U.S. morning hours, after hitting a daily low of $2.978.
Trade volumes were expected to remain light on Monday, with U.S. markets closed for a holiday.
On Friday, natural gas declined 3.1 cents, or 0.98%, to settle at $3.127.
Futures were likely to find support at $2.932 per million British thermal units, the low from January 14, and resistance at $3.228, the high from January 16.
Updated weather forecasting models for the lower 48 U.S. states called for seasonal temperatures over the next two weeks. The outlook for late-January previously called for a significant cold snap.
Bearish speculators are betting on the near-normal weather reducing winter demand for the heating fuel.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Meanwhile, total U.S. natural gas storage stood at 2.853 trillion cubic feet as of last week, 11.0% above year-ago levels and 3.8% below the five-year average for this time of year.
Inventories fell by 236 billion cubic feet last week, more than expectations for a decline of 224 billion and compared to a drop of 131 billion in the preceding week.
Natural gas prices are down almost 33% since mid-November as an unusually mild start to winter limited demand while production soared.
Elsewhere on the Nymex, crude oil for delivery in March dropped 81 cents, or 1.66%, to trade at $48.32 a barrel, while heating oil for February delivery slumped 0.95% to trade at $1.649 per gallon.