Investing.com - Natural gas prices plunged on Tuesday, falling to a six-day low after official data showed that U.S. gas production rose to a fresh record last month, while mild weather forecasts further dampened sentiment on the heating fuel.
On the New York Mercantile Exchange, natural gas futures for March delivery traded at USD2.524 per million British thermal units during U.S. morning trade, plummeting 6.97%.
It earlier plunged by as much as 7.56% to trade at USD2.508 per million British thermal units, the lowest since January 23.
Natural gas futures came under pressure after the U.S. Energy Information Administration said that gas output from the lower 48 U.S. states rose by 1.3% in November to a record 72.61 billion cubic feet from 71.69 billion in October.
Total U.S. output gained 2.7% to 82.7 billion cubic feet a day as production in Alaska rose 14%.
In a research note, Barclays Capital called the new figures "stunning."
Official supply data released last week showed that U.S. gas inventories remain at their highest level ever for this time of year. Total U.S. natural gas storage stood at 3.098 trillion cubic feet as of last week, 20.7% above year-earlier supplies and 21.4% above the five-year average, the most since June 2009.
Meanwhile, the U.S. National Weather Service said earlier that it expected above-normal temperatures over most parts of the U.S. west and northwest during the next six to 10 days.
In addition, industry weather group MDA EarthSat said "the forecast has taken a major warm shift," and that predictions for below-normal temperatures in the U.S. northeast as far out as Valentine's Day were weakening.
This is typically the coldest time in winter, but temperatures in the U.S. have yet to reach levels cold enough to boost demand for the heating fuel, keeping prices depressed at unseasonably low levels.
Last week, gas prices fell as low as USD2.319 per million British thermal units, the lowest since February 2002, before rebounding after production-cut announcements by major U.S. natural gas producers sparked a massive short-covering rally.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March climbed 1.15% to trade at USD99.94 a barrel, while heating oil for March delivery added 0.88% to trade at USD3.064 per gallon.