Investing.com - U.S. natural gas prices started the week off with heavy losses on Monday, falling to a two-week low as unusually mild December weather weighed on the fuel.
Natural gas for delivery in January on the New York Mercantile Exchange sank 5.5 cents, or 2.54%, to trade at $2.131 per million British thermal units during U.S. morning hours. It earlier fell to $2.105, a level not seen since November 23.
Natural gas dipped 2.6 cents, or 1.17%, last week. Prices of the fuel typically rise ahead of the winter as colder weather sparks heating demand. But warmer temperatures throughout the autumn and early winter limited demand, underlining concerns over a deepening supply glut and driving prices to multi-year lows near $2 per million British thermal units at the end of October.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Meanwhile, the U.S. Energy Information Administration said that natural gas supplies in storage fell by 53 billion cubic feet last week, compared to expectations for a decline of 51 billion.
That compared with a build of 9 billion cubic feet in the prior week, a withdrawal of 22 billion cubic feet in the same week last year, while the five-year average change for the week is a drawdown of 50 billion cubic feet.
Total U.S. natural gas storage stood at 3.956 trillion cubic feet, 13.7% higher than levels at this time a year ago and 6.2% 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.
Inventories of the gas are typically built up during the warm summer months and then drawn down in the winter as cold temperatures increase demand for the fuel.
The EIA's next storage report slated for release on Thursday, December 10 is expected to show a withdrawal of approximately 60 billion cubic feet for the week ending December 4.
That compared with a decline of 51 billion cubic feet in the same week last year, while the five-year average change for the week is a drawdown of 79 billion cubic feet.
Elsewhere on the Nymex, crude oil for delivery in January tumbled $1.09, or 2.71%, to trade at $38.88 a barrel, while heating oil for January delivery dropped 1.96% to trade at $1.316 per gallon.