Investing.com - U.S. natural gas prices rose on Monday, as forecasts predicted a return to cool weather in the Midwest later this month following a warm spell which sank prices to the lowest level since March 1999 last week.
Natural gas for delivery in January on the New York Mercantile Exchange rallied 4.1 cents, or 2.29%, to trade at $1.808 per million British thermal units during U.S. morning hours.
Futures regained strength after updated weather forecasting models pointed to cooler temperatures across the central U.S. in the last week of December as an extended warm spell begins to weaken.
Bullish speculators are betting on the cool winter weather to increase demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.
Prices fell to $1.684 on Friday, a level not seen in almost 17 years, as updated weather forecasting models pointed to warmer-than-normal temperatures across most parts of the U.S. through Christmas.
Natural gas typically rises ahead of the winter as colder weather sparks heating demand, yet an unusually mild start to winter due to the El Niño weather phenomenon has limited the amount of heating days.
Natural gas futures plunged 14.6 cents, or 11.21% last week. Prices of the fuel are down nearly 44% so far this year, the biggest annual decline since 2006, as weak demand and healthy stockpiles weighed.
Total U.S. natural gas storage stood at 3.846 trillion cubic feet as of last week, 14.1% higher than levels at this time a year ago and 8.4% above the five-year average for this time of year.
The U.S. Energy Information Administration's next storage report slated for release on Thursday, December 24 is expected to show a withdrawal of approximately 45 billion cubic feet for the week ending December 18.
That compares with a drawdown of 34 billion cubic feet in the prior week, 49 billion cubic feet in the same week last year, while the five-year average change for the week is a decline of 140 billion cubic feet.
Elsewhere on the Nymex, crude oil for delivery in January shed 34 cents, or 0.93%, to trade at $35.72 a barrel, while heating oil for January delivery dropped 1.22% to trade at $1.093 per gallon.