Investing.com - U.S. natural gas futures fell sharply on Wednesday, as market participants looked ahead to fresh weekly information on U.S. gas inventories to gauge the strength of demand for the fuel.
Natural gas for delivery in December on the New York Mercantile Exchange dropped 5.7 cents, or 2.41%, to trade at $2.304 per million British thermal units during U.S. morning hours. It earlier fell by as much as 3.4% to $2.287.
A day earlier, natural gas futures plunged to the lowest level since April 2012 after updated forecasting models showed that unseasonably warm readings will persist in much of the country through November 6, dampening demand expectations for the fuel.
Bearish speculators are betting on the warm weather reducing early-winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.
Meanwhile, the U.S. Energy Information Administration's next storage report on Thursday is expected to show a build of approximately 75 billion cubic feet for the week ending October 23.
That compares with builds of 100 billion cubic feet in the prior week, 94 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 84 billion cubic feet.
U.S. natural gas supplies in storage stood at 3.814 trillion cubic feet, 4.5% above the five-year average for this time of year. Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter’s unusually strong demand.
Stockpiles are set to reach a record by the end of this month. The EIA sees storage levels peaking at 3.956 trillion in November, which would top the November 2012 high of 3.929 trillion.
Elsewhere on the Nymex, crude oil for delivery in December rose 47 cents, or 1.09%, to trade at $43.67 a barrel, while heating oil for December delivery tacked on 1.31% to trade at $1.464 per gallon.