Natural gas futures fell on Tuesday as weather forecasts pointed at normal temperatures across the East Coast. The fuel was also pressured as analysts expected this weeks build to exceed the five-year average, sighting waning demand.
On the New York Mercantile Exchange, natural gas for October delivery fell by 1.2% to $3.560 per million British thermal units at 14:54 GMT. Prices held in range between days high and low of $3.629 and $3.541 per barrel respectively. The fuel rose 1.9% on Monday trimmed its weekly advance to little over 0.7% after Tuesdays decline.
Gas declined on Tuesday as weather forecasters predicted seasonal temperatures over key consuming areas in the near future. According to Commodity Weather Group LLC in Bethesda, Maryland, temperatures over the East Coast will remain near the average between September 15 and September 24. AccuWeather Inc. in State College, Pennsylvania, said temperatures in New York may peak at 73 degrees Fahrenheit on September 22, matching seasonal values.
When warmer-than-normal weather is expected, natural gas surges as increased electricity demand to power air-conditioning calls for more supply of the fuel, which is used for a quarter of the U.S. electricity generation. Mild temperatures have the opposite effect. According to the Energy Information Administration, power generation accounts for 32% of U.S. gas demand.
Market players also eyed the upcoming EIA weekly natural gas storage statistics, due to be released at 14:30 GMT on Thursday. According to a Bloomberg survey of analysts, U.S. natural gas inventories probably increased by 64 billion cubic feet in the week ended September 6, above the five-year average build of 62 billion cubic feet.
Last Thursday, the fuel plunged 3% after the Energy Information Administration reported that U.S. natural gas inventories rose by 58 billion cubic feet in the week ended August 30, surpassing analysts’ expectations. Early injection estimates ranged between 45 billion and 53 billion cubic feet. According to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos., stockpiles were projected to rise by 53 billion to 57 billion cubic feet. During the comparable week last year, natural gas stockpiles rose by 33 billion cubic feet.
Phil Flynn, a senior market analyst at Price Futures Group in Chicago, said for Bloomberg: “The storage injection possibly coming in above average is putting pressure on the market. We had a little bit of a drop in demand last week and inventories are starting to catch up.”
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
