Investing.com - U.S. natural gas prices edged higher on Monday, but held near the previous session's three-week low as forecasts for mild weather across the U.S. in the weeks ahead dampened demand expectations for the fuel.
Natural gas for delivery in September on the New York Mercantile Exchange inched up 0.3 cents, or 0.13%, to trade at $2.720 per million British thermal units during U.S. morning hours.
On Friday, natural gas fell to $2.706, the weakest level since July 9, before ending the day at $2.716, down 5.2 cents, or 1.88%.
The September natural gas contract declined 2.9 cents, or 2.13%, last week, 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 last week 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 delivery in September shed 81 cents, or 1.72%, to trade at $46.31 a barrel, while heating oil for September delivery dropped 1.35% to trade at $1.567 per gallon.