Investing.com - U.S. natural gas prices plunged sharply on Monday, as weather forecasters predicted a return to warmer weather by the end of the month, cutting down on heating fuel demand.
On the New York Mercantile Exchange, natural gas for delivery in January fell by as much as 5.45% to touch a session low of $4.176 per million British thermal units, the most since November 12.
Prices last traded at $4.229 during U.S. morning hours, down 18.9 cents, or 4.27%.
Nymex gas futures tumbled 23.2 cents, or 4.99%, on Friday to settle at $4.417 per million British thermal units as weather forecasting models pointed to less frigid temperatures across the U.S. later this month.
Futures were likely to find support at $4.140 per million British thermal units, the low from November 16, and resistance at $4.689, the high from November 21.
Natural gas came under pressure as milder temperatures were expected to spread across most parts of the U.S., after a blast of cold air swept through much of the country earlier in the week, prompting investors to bet that utilities and homes will burn less natural gas as demand for heating falls.
Meanwhile, investors continued to digest last week's inventory data, which showed the first storage draw of the heating season.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Natural gas storage in the U.S. fell by 17 billion cubic feet last week, compared to expectations for a decline of 12 billion.
Inventories fell by 36 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 10 billion cubic feet.
Total U.S. natural gas storage stood at 3.594 trillion cubic feet as of last week, narrowing the deficit to the five-year average to 6.4% from a record 54.7% at the end of March.
The U.S. Energy Information Administration's next storage report slated for release on Wednesday is expected to show a significant decline of 130 billion cubic feet for the week ending November 21.
Elsewhere on the Nymex, crude oil for delivery in January lost 35 cents, or 0.46%, to trade at $76.16 a barrel, while heating oil for January delivery slumped 0.65% to trade at $2.365 per gallon.