Natural gas futures hit 28-month low after bearish storage data

Investing.com - Natural gas futures plunged to a 28-month low on Thursday, after data showed that U.S. natural gas supplies fell less than forecast last week, underlining concerns over weak demand.

On the New York Mercantile Exchange, natural gas for delivery in March tumbled to $2.694 per million British thermal units, a level not seen since September 2012, before trading at $2.710 during U.S. morning hours, down 13.3 cents, or 4.66%.

Futures were likely to find support at $2.647 per million British thermal units, the low from September 2012, and resistance at $2.895, the high from January 28.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended January 23 fell by 94 billion cubic feet, compared to expectations for a decline of 113 billion and slowing from a drop of 216 billion in the previous week.

Inventories fell by 219 billion cubic feet in the same week a year earlier, while the five-year average change is a drop of 168 billion cubic feet.

Total U.S. natural gas storage stood at 2.543 trillion cubic feet. Stocks were 324 billion cubic feet higher than last year at this time and 79 billion cubic feet below the five-year average of 2.622 trillion cubic feet for this time of year.

A day earlier, natural gas lost 9.3 cents, or 3.17%, to settle at $2.842 as investors assessed the near-term demand outlook in the aftermath of Tuesday's Northeast blizzard.

Updated weather forecasting models said that below-normal temperatures in the East may give way to higher readings by the middle of February, dampening demand expectations for the heating fuel.

Bearish speculators are betting on the near-normal weather reducing winter demand for the heating fuel.

The heating season from November through March is the peak demand period for U.S. gas consumption.

Natural gas prices have been extremely volatile in recent sessions as investors react to daily changes in weather patterns. Futures have either gained or declined more than 2% in 13 of the past 16 trading days.

Prices are down almost 40% since mid-November as an unusually mild start to winter limited demand while production soared.

Elsewhere on the Nymex, crude oil for delivery in March lost 45 cents, or 1.01%, to trade at $44.00 a barrel, while heating oil for March delivery slumped 0.29% to trade at $1.604 per gallon.

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