Natural gas futures little changed near 10-month high

Investing.com - Natural gas futures were little changed near the highest level since December 2011 during U.S. morning trade on Monday, as some profit taking emerged while market players continued to monitor weather forecasts over the next few weeks to gauge the strength of early-Autumn U.S. heating demand.  

On the New York Mercantile Exchange, natural gas futures for delivery in November traded at USD3.610 per million British thermal units during U.S. morning trade, shedding 0.2%.       

It earlier fell by as much as 0.7% to trade at a session low of USD3.591 per million British thermal units.

On Friday, natural gas prices rallied to USD3.647 per million British thermal units, the strongest level since December 2, 2011, after bullish speculators bet colder weather in the U.S. will lead to some early-Autumn demand for the heating fuel.

Private forecasters WSI Energycast said last Friday that cold weather was expected to descend across much of the U.S. over the next two weeks.

The weather service provider said a "sizeable pattern shift" will lead to a sharp cooling across the eastern two-thirds of the U.S. in late-October and early-November.

Meanwhile, MDA EarthSat’s 11-to 15-day outlook issued last Friday also called for below normal temperatures across much of the eastern half of the nation during the period.

Natural gas futures often reach a seasonal low in October, when mild weather reduces demand, before recovering in the winter, when heating-fuel use peaks.

Meanwhile, market players continued to focus on bloated U.S. inventory levels. Total U.S. gas supplies stood at 3.776 trillion cubic feet as of last week, 5% above last year’s level and 7.1% above the five-year average for the week.

At the end of March, inventories were roughly 60% above the five-year average.

Early injection estimates for this Thursday’s storage data range from 52 billion cubic feet to 77 billion cubic feet, compared to last year's build of 95 billion cubic feet. The five-year average change for the week is an increase of 65 billion cubic feet.

Despite recent gains, concerns remain that U.S. inventories will end the injection season above the record high of 3.852 trillion cubic feet, set last year.

The EIA projected earlier in the month that natural gas stocks are expected to hit a fresh record high of 3.903 trillion cubic feet on October 31.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in December dropped 0.75% to trade at USD89.74 a barrel, while heating oil for November delivery fell 0.85% to trade at USD3.107 per gallon.