Investing.com - U.S. natural gas futures started the week with heavy losses on Monday, as forecasts of warmer weather and lighter heating demand for the next two weeks dragged down prices.
Natural gas for February delivery on the New York Mercantile Exchange tumbled by more than 5% to a session low of $3.115 per million British thermal units, a level not seen since November 24.
It was last at $3.124 by 9:40AM ET (14:40GMT), down 16.1 cents, or around 4.9%.
Prices of the heating fuel lost 43.9 cents, or 11.8%, last week, as forecasts of mild January weather replaced predictions of severe cold.
According to updated weather forecasting models, above normal temperatures are expected throughout large portions of the southern and eastern U.S. through January 23, dampening demand for the heating fuel.
About half of U.S. homes use natural gas for heating.
Natural-gas markets have been volatile in recent weeks, changing course rapidly in response to shifting outlooks in short-term weather patterns.
Prices rallied to two-year highs at the end of December amid weather forecasts that predicted extreme cold would hit most of the country in January. But the arctic blast is now expected to be briefer than many anticipated, with milder temperatures taking hold in mid-January.
Meanwhile, market participants looked ahead to weekly storage data due on Thursday, which is expected to show a draw in a range between 135 and 145 billion cubic feet in the week ended January 6.
That compares with a withdrawal of 49 billion cubic feet in the preceding week, 168 billion a year earlier and a five-year average drop of 167 billion cubic feet.
Total natural gas in storage currently stands at 3.311 trillion cubic feet, according to the U.S. Energy Information Administration, 9.9% lower than levels at this time a year ago and less than 1% below the five-year average for this time of year.