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Natural gas hovers close to 3-week low on demand concerns

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Forex Pros – utures Pros – Natural gas futures were down sharply on Wednesday, hovering close to a three-week low amid indications of diminishing demand as forecasts showed moderating weather in the southern and eastern U.S. states next week.    

On the New York Mercantile Exchange, natural gas futures for June delivery traded at USD4.183 per million British thermal units during U.S. morning trade, dropping 1.95%.

It earlier fell by as much as 2.45% to a daily low of USD4.160 per million British thermal units.

The Commodity Weather Group said that it expected normal or slightly below-normal temperatures in the southern and eastern U.S. states from May 14 to May 18, potentially reducing air-conditioning use.

“A variable spring pattern is preventing heat from locking in anywhere over the next week. Instead, most areas see occasional quick hits of heat,” CWG forecasters said in a report published on Tuesday.

Weather forecasts had previously called for extremely warmer-than-normal temperatures in the U.S. east and south during that period.

According to weather service provider AccuWeather, the high temperature in New York on May 16 will be 71 degrees Fahrenheit (22 Celsius), matching the normal temperature. 

Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.

Meanwhile, the U.S. Energy Information Administration was due to release its weekly report on U.S. natural gas stockpiles for the week ended May 6 on Thursday.

The report was expected to show that U.S. natural gas inventories increased by 69 billion cubic feet, after adding 72 billion cubic feet in the preceding week.

Elsewhere, light sweet crude oil futures for delivery in June tumbled 2.7% to trade at USD100.91 a barrel, while heating oil for June delivery sank 1.45% to trade at USD2.961 per gallon during U.S. morning trade.

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