Investing.com - Natural gas futures fell towards the lowest level in more than three years on Friday, as demand for the fuel was likely to remain limited after meteorologists predicted mild weather in much of the U.S. in the weeks ahead.
On the New York Mercantile Exchange, natural gas for delivery in November hit an intraday low of $2.410 per million British thermal units, before ending the day at $2.430, down 2.3 cents, or 0.94%.
A day earlier, futures tumbled 6.5 cents, or 2.58%, after weekly storage data showed that U.S. natural gas supplies rose more than expected last week.
For the week, natural gas prices lost 9.0 cents, or 2.88%, as healthy stockpiles and warm weather weighed.
A brief burst of cold air across the eastern U.S. will give way to unseasonably warm readings early next week, dampening demand expectations for the fuel.
Bearish speculators are betting on the warm weather reducing early-winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.
Data released Thursday showed that U.S. natural gas supplies rose more than expected last week, underlining concerns over weak demand.
Natural gas storage increased by 100 billion cubic feet, according to the Energy Information Administration, above expectations for an increase of 93 billion.
That compared with builds of 95 billion cubic feet in the prior week, 105 billion cubic feet in the same week last year, while the five-year average change for the week was an increase of 87 billion cubic feet.
Total U.S. natural gas storage stood at 3.733 trillion cubic feet, 13.6% higher than during the same week a year earlier and 4.7% 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.
The EIA's next storage report slated for release on Thursday, October 22 is expected to show another hefty build of approximately 100 billion cubic feet for the week ending October 16.
That compares with builds of 94 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 84 billion cubic feet.
Elsewhere on the Nymex, crude oil for November delivery settled at $47.26 a barrel by close of trade on Friday, down $2.25, or 4.78%, on the week, while heating oil for November delivery dropped 5.93% on the week to settle at $1.496 per gallon.