Investing.com - Natural gas futures sank to the lowest level in almost four weeks on Friday, as warm weather and healthy stockpiles continued to weigh.
On the New York Mercantile Exchange, natural gas for delivery in December plunged 13.1 cents, or 5.76%, to close the week at $2.145 per million British thermal units on Friday. It earlier fell to $2.123, the lowest since October 28. Meanwhile, the January contract slumped 12.1 cents, or 5.02%, to end at $2.291.
For the week, natural gas tumbled 30.4 cents, or 9.15%, as forecasts for the next two weeks turned milder, dampening near-term demand expectations for the heating fuel. Prices are down almost 30% from highs hit in mid-August.
Natural gas futures have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early-winter heating demand.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Natural gas lost 3% on Thursday after data showed U.S. gas supplies rose to an all-time high last week, underlining concerns over weak demand.
The U.S. Energy Information Administration said natural gas supplies in storage rose by 15 billion cubic feet last week, below expectations for an increase of 18 billion.
That compared with builds of 49 billion cubic feet in the prior week, 40 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 30 billion cubic feet.
Total U.S. natural gas storage stood at a record-high of 4.000 trillion cubic feet, 10.1% higher than levels at this time a year ago and 5.2% above the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter’s unusually strong demand.
Market experts warned that stockpile buildups will probably continue for at least another week, two weeks beyond what is normal, due to tepid winter heating demand so far.
Inventories of the gas are typically built up during the warm summer months and then drawn down in the winter as cold temperatures increase demand for the fuel.
Natural gas prices typically rise ahead of the winter as colder weather sparks heating demand. But a mild start to the winter heating season underlined concerns over a deepening supply glut, driving prices to multi-year lows near $2 per million British thermal units at the end of October.
Elsewhere on the Nymex, crude oil for January delivery settled at $41.90 a barrel by close of trade on Friday, down 53 cents, or 0.86%, on the week, while heating oil for December delivery dipped 0.72% on the week to settle at $1.371 per gallon.