Natural gas futures down more than 1% in early trade

U.S. natural gas futures were under pressure during early U.S. trade on Wednesday, as market players monitored near-term weather forecasts to gauge the strength of demand for the fuel ahead of Thursday’s closely-watched supply report.

On the New York Mercantile Exchange, natural gas for delivery in November traded at $3.896 per million British thermal units during U.S. morning hours, down 6.1 cents, or 1.55%.

Natural gas prices fell to a two-week low of $3.866 on Tuesday, before turning higher to settle $3.957, up 5.9 cents, or 1.51%.

Futures were likely to find support at $3.845 per million British thermal units, the low from September 24 and resistance at $4.000, the high from October 6.

Updated weather-forecasting models predicted that temperatures would be mostly normal or higher than usual in the lower 48 states from October 11 through October 15.

Bearish speculators are betting on the warm weather reducing early-winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.

Meanwhile, the U.S. Energy Information Administration’s weekly storage report slated for release on Thursday is expected to show an increase of 114 billion cubic feet for the week ending October 3.

Inventories rose by 91 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 84 billion cubic feet.

Injections of gas into storage have surpassed the five-year average for 24 consecutive weeks, alleviating concerns over tightening supplies.

Total U.S. natural gas storage stood at 3.100 trillion cubic feet as of last week, narrowing the deficit to the five-year average to 11.4% from a record 54.7% at the end of March.

Elsewhere on the Nymex, crude oil for delivery in November lost 88 cents, or 0.98%, to trade at $87.98 a barrel, while heating oil for November delivery dipped 0.84% to trade at $2.585 per gallon.