Natural gas futures plunge 5% after bearish storage data

Investing.com - Natural gas futures plunged 5% on Thursday, after data showed that U.S. natural gas supplies fell less than forecast last week, underlining concerns over weak demand.

On the New York Mercantile Exchange, natural gas for delivery in February tumbled 13.0 cents, or 4.35%, to trade at $2.844 per million British thermal units during U.S. morning hours. Prices were at $2.903 prior to the release of the supply data.

Futures were likely to find support at $2.795 per million British thermal units, the low from January 13, and resistance at $3.228, the high from January 16.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended January 16 fell by 216 billion cubic feet, below expectations for a decline of 227 billion and compared to a drop of 236 billion in the previous week.

Inventories fell by 133 billion cubic feet in the same week a year earlier, while the five-year average change is a drop of 176 billion cubic feet.

Total U.S. natural gas storage stood at 2.637 trillion cubic feet. Stocks were 199 billion cubic feet higher than last year at this time and 153 billion cubic feet below the five-year average of 2.790 trillion cubic feet for this time of year.

A day earlier, natural gas surged 14.3 cents, or 5.05%, to settle at $2.974 as investors reacted to daily changes in weather patterns.

Updated weather forecasting models for the lower 48 U.S. states continued to call for mostly seasonal temperatures from January 22 to January 29.

However, extended forecasts showed lower readings were expected for most of the nation from January 30 through February 3.

Bullish speculators are betting on the cooler weather to increase winter-heating demand for the fuel.

The heating season from November through March is the peak demand period for U.S. gas consumption.

Natural gas prices are down almost 37% 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 fell 53, or 1.11%, to trade at $47.25 a barrel, while heating oil for February delivery inched down 0.01% to trade at $1.646 per gallon.