Investing.com - U.S. natural gas futures declined in pre-New Year holiday trade on Thursday morning, but prices held near a two-year high after data showed that natural gas supplies in storage in the U.S. fell much more than the five-year average for this time of year.
Natural gas for February delivery on the New York Mercantile Exchange dropped 7.0 cents, or 1.8%, to $3.828 per million British thermal units by 10:49AM ET (15:49GMT). Futures were at around $3.820 prior to the release of the supply data.
Prices rallied to $3.902 in the prior session, a level not seen since December 2014, amid colder forecasts for January.
Trade is expected to remain thin for the rest of the week as most investors are away for year-end holidays.
The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. declined by a whopping 237 billion cubic feet in the week ended December 23, exceeding market expectations for a drop of 222 billion cubic feet.
It was the biggest withdrawal for the week since at least 1994.
That compared with a withdrawal of 209 billion cubic feet in the preceding week, 58 billion a year earlier and a five-year average drop of 80 billion cubic feet.
Total natural gas in storage currently stands at 3.360 trillion cubic feet, according to the U.S. Energy Information Administration, almost 11.0% lower than levels at this time a year ago and 2.3% below the five-year average for this time of year.
The amount of gas in storage fell below the weekly five-year average for the first time since May 2015.
Meanwhile, updated weather forecasting models predicted that portions of the West and northern U.S. will be hit with rain, snow and slightly cool temperatures over the next few days.
Looking ahead, Artic air is expected into the West and then spreading south and east in the first week of January, boosting demand expectations for the heating fuel.
Natural gas prices typically rise during the winter as colder weather sparks indoor-heating demand. About half of U.S. homes use natural gas for heating.