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Natural gas falls on forecasts for mild U.S. weather

CommoditiesSep 19, 2014 02:17PM ET
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Natural gas prices fall on forecasts for mild U.S. weather - Natural gas prices fell on Friday after updated weather-forecasting models called for mild temperatures for a good portion of the U.S. into early October, which should dampen demand for both conditioning.

Demand for heating could arise, which cushioned the commodity's losses.

On the New York Mercantile Exchange, natural gas futures for delivery in October were down 1.62% at $3.847 per million British thermal units during U.S. trading. The commodity hit a session low of $3.835, and a high of $3.916.

The October contract settled down 2.57% on Thursday to end at $3.910 per million British thermal units.

Natural gas futures were likely to find support at $3.786 per million British thermal units, last Friday's low, and resistance at $4.078, the high from Sept. 2.

"The latest forecast data continue to stream in and remain in line with our going forecast of very comfortable U.S. weather patterns setting up into the first week of October. After much of the U.S. experiences highs in the 70s and 80s this weekend, a fast moving weather system will track across the Midwest and Northeast Monday and Tuesday and will drive some light heating demand," reported in its Friday midday update.

"This will likely be the last somewhat chilly weather system over the central and eastern U.S. until October."

Thursday's stockpile report kept prices in negative territory as well.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Sept. 12 rose by 90 billion cubic feet, broadly in line with market expectations.

Inventories rose by 48 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 71 billion cubic feet, a figure that sent prices dropping on Thursday and into Friday as well.

Injections of gas into storage have surpassed the five-year average for 22 consecutive weeks, alleviating concerns over tightening supplies.

Total U.S. natural gas storage stood at 2.891 trillion cubic feet. Stocks were 401 billion cubic feet less than last year at this time and 444 billion cubic feet below the five-year average of 3.335 trillion cubic feet for this time of year.

Updated weather-forecasting models calling for mild temperatures across the eastern and northern U.S. pressured prices lower as well, as thermal power plants will burn less of the commodity to reduced use of air conditioning.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in November were down 0.71% at $91.33 a barrel, while heating oil for October delivery were down 0.16% at $2.7079 per gallon.

Natural gas falls on forecasts for mild U.S. weather

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