Investing.com - Natural gas futures sank to the lowest level in more than three years on Friday, as demand for the fuel was likely to remain limited after meteorologists predicted warmer-than-normal temperatures 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 $2.275 per million British thermal units, a level not seen since June 2012, before ending at $2.286, down 10.0 cents, or 4.19%.
For the week, the front-month natural gas contract tumbled 17.8 cents, or 5.93%, as warm weather and healthy stockpiles weighed.
Updated forecasting models showed that unseasonably warm readings will persist in much of the country through November 6, 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 slightly less than expected last week, underlining concerns over weak demand.
Natural gas supplies in storage increased by 81 billion cubic feet, according to the Energy Information Administration, below expectations for an increase of 88 billion.
That compared with builds of 100 billion cubic feet in the prior week, 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.
Total U.S. natural gas storage stood at 3.814 trillion cubic feet, 4.5% 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.
Stockpiles are set to reach a record by the end of this month. The EIA sees storage levels peaking at 3.956 trillion in November, which would top the November 2012 high of 3.929 trillion.
The EIA's next storage report slated for release on Thursday, October 29 is expected to show a build of approximately 90 billion cubic feet for the week ending October 23.
That compares with builds of 87 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 81 billion cubic feet.
Elsewhere on the Nymex, crude oil for November delivery settled at $44.60 a barrel by close of trade on Friday, down $2.67, or 5.63%, on the week, while heating oil for November delivery dropped 2.8% on the week to settle at $1.454 per gallon.