Investing.com - U.S. natural gas prices declined on Tuesday, as forecasts for mild weather across the U.S. in the weeks ahead dampened demand expectations for the fuel.
Updated weather forecasting models called for mostly average temperatures across most parts of the U.S. in the next two weeks.
Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use. Natural gas accounts for about a quarter of U.S. electricity generation.
Natural gas for delivery in August dropped 4.7 cents, or 1.66%, on the New York Mercantile Exchange to trade at $2.758 per million British thermal units during U.S. morning hours. Futures were likely to find support at $2.733, the low from June 24, and resistance at $2.866, the high from June 26.
On Monday, natural gas prices tacked on 3.5 cents, or 1.26%, to close at $2.805 amid speculation utilities and power generators will switch from coal to natural gas in wake of the recent slide in prices.
Total U.S. natural gas storage stood at 2.508 trillion cubic feet as of last week, 38.3% higher than during the same week a year earlier and 1.4% above the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have made up for all of last winter’s unusually strong demand.
The U.S. Energy Information Administration said last week that natural gas storage in the U.S. rose by 75 billion cubic feet, compared to expectations for an increase of 77 billion and following a build of 89 billion cubic feet in the preceding week.
Supplies rose by 110 billion cubic feet in the same week last year, while the five-year average change is an increase of 86 billion cubic feet.
The EIA's next storage report slated for release on Thursday, July 2 is expected to show a build of approximately 70 billion cubic feet for the week ending June 26.
Supplies rose by 102 billion cubic feet in the same week last year, while the five-year average change is an increase of 75 billion cubic feet.
Elsewhere on the Nymex, crude oil for delivery in August inched up 31, or 0.53%, to trade at $58.64 a barrel, while heating oil for July delivery eased up 0.02% to trade at $1.864 per gallon.