Investing.com - U.S. natural gas futures started the week on a downbeat note on Monday, with prices sliding to their lowest level in around two months, as traders reacted to the reality that higher demand for the commodity was coming to an end.
U.S. natural gas for November delivery fell to $2.835 per million British thermal units at one point, its lowest since Aug. 9, before crawling back to $2.867 by 8:35AM ET (1235GMT), little changed on the day.
Futures saw a drop of nearly 5% last week as weather forecasting models predicted mild temperatures that should limit demand for the heating fuel in the coming days.
The eastern part of the U.S. will warm back into the 70s and 80s Fahrenheit through Oct. 14, as high pressure returns. The West Coast will be mild to warm, while very warm to hot over the southern U.S., according to NatGasWeather.com.
Bearish speculators are betting on the warm weather reducing early-winter demand for the heating fuel.
Gas futures often reach a seasonal low in October, when mild weather reduces demand, before recovering in the winter, when heating-fuel use peaks.
Total natural gas in storage currently stands at 3.508 trillion cubic feet, according to the U.S. Energy Information Administration, around 4.3% lower than levels at this time a year ago and 0.2% below the five-year average for this time of year.
Market participants looked ahead to weekly storage data due on Thursday, which is expected to show a build in a range between 84 and 94 billion cubic feet in the week ended October 6.
That compares with a gain of 42 billion cubic feet in the preceding week, a build of 79 billion a year earlier and a five-year average rise of 87 billion cubic feet.