Investing.com - Natural gas futures fell to a three-week low on Friday, as forecasts for mild weather across the U.S. in the weeks ahead dampened demand expectations for the fuel.
On the New York Mercantile Exchange, natural gas for delivery in September hit an intraday low of $2.706 per million British thermal units, the weakest level since July 9, before ending the day at $2.716, down 5.2 cents, or 1.88%.
On Thursday, natural gas futures plunged 9.6 cents, or 3.35%, to close at $2.768 despite data showing that U.S. natural gas supplies rose less than expected last week.
For the week, the September natural gas contract declined 2.9 cents, or 2.13%, the second straight weekly loss. Futures dropped 12.6 cents, or 4.43%, in July, amid concerns over weak summer demand.
Updated weather forecasting models called for mostly average temperatures across most parts of the U.S. in the next two weeks.
Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use. Natural gas accounts for about a quarter of U.S. electricity generation.
According to the U.S. Energy Information Administration, natural gas storage stood at 2.828 trillion cubic feet as of last week, 28.2% higher than during the same week a year earlier and 2.9% above the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have made up for all of last winter’s unusually strong demand.
Data on Thursday showed that natural gas storage in the U.S. rose by 52 billion cubic feet, below expectations for an increase of 54 billion and following a build of 61 billion cubic feet in the preceding week.
Supplies rose by 88 billion cubic feet in the same week last year, while the five-year average change is an increase of 48 billion cubic feet.
The EIA\'s next storage report slated for release on Thursday, August 6 is expected to show a build of approximately 50 billion cubic feet for the week ending July 31.
Supplies rose by 83 billion cubic feet in the same week last year, while the five-year average change is an increase of 53 billion cubic feet.
Elsewhere on the Nymex, crude oil for September delivery settled at $47.12 a barrel by close of trade on Friday, down 88 cents, or 2.12%, on the week, while heating oil for September delivery dropped 2.99% on the week to settle at $1.588 per gallon.