Natural gas futures fall to 8-day low on moderating U.S. forecast

Forexpros – Natural gas futures were down for a second day on Tuesday, falling to an eight-day low as forecasts that a heat wave in the U.S. Midwest will moderate reduced demand expectations for the fuel.

On the New York Mercantile Exchange, natural gas futures for September delivery traded at USD4.301 per million British thermal units during U.S. morning trade, dropping 1.13%.

It earlier fell as much as 1.5% to trade at USD4.278 per million British thermal units, the lowest price since July 14.      

Industry weather group MDA Federal said earlier that it expected temperatures of extreme heat to moderate in the U.S. Midwestern states towards the end of July and early August.

The weather group said in a report that, “While temperatures were still plenty hot, compared to last week’s record- breaking heat this next round should be less impressive, with just some borderline ‘much-aboves’ present for a couple of days.”

Meanwhile, the Commodity Weather Group said that temperatures in Florida would be in a normal range through July 30.

Natural gas traders monitor weather forecasts to determine whether temperatures may boost heating or cooling demand.

Predictions of below-average or above-average temperatures may prompt traders to buy or sell gas futures.

Concerns over rising production levels also weighed on prices. Industry research group Baker Hughes said last week Friday that the number of active rigs drilling for natural gas in the U.S. rose to 889 from 885, the highest amount in eleven weeks and the fourth gain in five weeks.

Natural gas traders closely watch the rig count to gauge future supply growth. A drop to the 800-rig-level would be necessary to begin to balance the market, according to Baker Hughes.

Elsewhere on the Nymex, light sweet crude oil futures for delivery in September added 0.12% to trade at USD99.33 a barrel, while heating oil for September delivery rose 0.55% to trade at USD3.130 per gallon during U.S. morning trade.

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