Investing.com - U.S. natural gas futures plunged below the $2-level on Tuesday, as forecasts calling for warmer weather through the middle of February weighed. Forecasts originally called for cold winter weather during the period.
Bearish speculators are betting on the mild winter weather to reduce demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.
Natural gas for delivery in March on the New York Mercantile Exchange slid to an intraday low of $1.994 per million British thermal units, a level not seen since December 23, before trading at $1.998 by 14:50 GMT, or 9:50AM ET, down 15.4 cents, or 7.13%.
A day earlier, futures plunged 14.6 cents, or 6.35%, as forecasts calling for less cold weather over the next two weeks weighed.
Natural gas fell to $1.684 in mid-December, a level not seen in almost 17 years, as an unusually mild start to winter due to the El Niño weather phenomenon limited the amount of heating days.
Meanwhile, the U.S. Energy Information Administration’s next storage report slated due on Thursday is expected to show a withdrawal of approximately 200 billion cubic feet for the week ending January 29.
That compares with draws of 211 billion cubic feet in the prior week, 115 billion cubic feet in the same week last year and a five-year average of 178 billion.
Total U.S. natural gas storage stood at 3.086 trillion cubic feet, 17.2% higher than levels at this time a year ago and 14.0% above the five-year average for this time of year.
Elsewhere on the Nymex, crude oil for delivery in March dropped $1.61, or 5.09%, to trade at $30.01 a barrel, while heating oil for March delivery slumped 4.25% to trade at $0.9924 per gallon.