Natural gas futures retreat with weather, supply data in focus

Investing.com - Natural gas futures came under heavy selling pressure during U.S. morning trade on Thursday, as near-term demand expectations for the heating fuel were dampened after extended weather forecasts turned mild.

Forecasts originally called for colder-than-average weather during the period.

Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts on winter heating demand.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD3.366 per million British thermal units during U.S. morning trade, down 1.7% on the day.       

It earlier fell by as much as 1.9% to trade at a session low of USD3.357 per million British thermal units.

Extended weather forecasts showing mostly normal weather across most parts of the U.S. in the next 11-to-15 days dampened sentiment on the heating fuel.

Weather service provider MDA Weather said earlier that it expected temperatures for most of the U.S. to a warm up in the next 11-to-15-day outlook.

Bearish speculators are betting on the mild 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.

The heating fuel has lost nearly 14% since touching a 14-month high of USD4.001 per million British thermal units on November 26, on speculation that temperatures won’t be cold enough to erase a surplus of the fuel in storage.

Meanwhile, market players looked ahead to a closely watched U.S. government report on natural gas supplies on Friday. The report comes out a day later than usual due to the Christmas holiday.

Early withdrawal estimates range from 66 billion cubic feet to 83 billion cubic feet. Inventories fell by 87 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 140 billion cubic feet.

Total U.S. gas supplies stood at 3.724 trillion cubic feet as of last week, 2% higher than last year at this time and 10% above the five-year average for this time of year.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February eased down 0.15% to trade at USD90.83 a barrel, while heating oil for February delivery added 0.35% to trade at USD3.046 per gallon.