Natural gas futures fall to 1-week low on reduced demand outlook

Investing.com - Natural gas futures fell to a one-week low on Monday, as forecasts showing mild temperatures across much of the U.S. through late-September weighed on demand expectations.

On the New York Mercantile Exchange, natural gas futures for delivery in October traded at USD3.658 per million British thermal units during U.S. morning trade, down 0.8%.

The October contract fell by as much as 1.5% earlier in the session to hit a daily low of USD3.632 per million British thermal units, the weakest since September 16. The October contract settled 0.9% lower at USD3.687 per million British thermal units on Friday.

Meanwhile, the more actively traded contract for November delivery lost 0.8% to trade at USD3.734 per million British thermal units.

Nymex gas futures were likely to find support at USD3.627 per million British thermal units, the low from September 16 and resistance at USD3.809, the high from September 19.

Market players continued to monitor near-term weather forecasts to gauge the strength of demand for the fuel.

Updated weather forecasting models pointed to mostly normal to below-normal temperatures across most parts of the U.S. Northeast Midwest for the next ten days.

Bearish speculators are betting on the mild weather to reduce demand for the fuel with autumn’s low-demand shoulder season looming.

The shoulder season is the period in autumn when gas demand typically slackens and prices fall.

Meanwhile, U.S. supply levels also remained in focus. Total U.S. natural gas storage stood at 3.299 trillion cubic feet as of last week, 0.5% above the five-year average for the same week and 5.4% below last year's unusually high level.

Early injection estimates for this week’s storage data range from 70 billion cubic feet to 80 billion cubic feet, compared to a 79 billion cubic feet increase during the same week a year earlier.

The five-year average for the week is a build of 75 billion cubic feet.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in November dropped 1.1% to trade at USD103.61 a barrel, while heating oil for October delivery declined 0.9% to trade at USD2.978 per gallon.