Investing.com - U.S. natural gas prices sold off sharply on Tuesday, as forecasts for the next two weeks turned milder, dampening near-term demand expectations for the heating fuel.
Natural gas for delivery in December on the New York Mercantile Exchange plunged 7.7 cents, or 3.25%, to trade at $2.308 per million British thermal units during U.S. morning hours. It earlier fell to $2.285, the lowest since November 12.
On Monday, natural gas prices jumped 2.4 cents, or 1.02%, after meteorologists predicted colder-than-normal temperatures in much of the U.S. in the week ahead.
However, updated weather forecasting models released Tuesday showed temperatures in the U.S. Midwest and Southeast will be warmer than previously forecast during the period.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early-winter heating demand.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Meanwhile, U.S. supply levels remained in focus. Natural gas supplies in storage rose by 49 billion cubic feet last week, according to the U.S. Energy Information Administration, below expectations for an increase of 51 billion.
That compared with builds of 52 billion cubic feet in the prior week, 40 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 30 billion cubic feet.
Total U.S. natural gas storage stood at an all-time high of 3.978 trillion cubic feet, almost 10% higher than levels at this time a year ago and 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.
Natural-gas prices typically rise ahead of the winter as colder weather sparks heating demand. But a mild start to the winter heating season underlined concerns over a deepening supply glut.
Elsewhere on the Nymex, crude oil for delivery in December lost 80 cents, or 1.92%, to trade at $40.94 a barrel, while heating oil for December delivery shed 0.9% to trade at $1.372 per gallon.