Natural gas drops below $5 for the first time in two months as disappointing U.S. heating demand

Bone-chilling temperatures are coming up for the United States but not fast enough for bulls on the natural gas market, who suffered another markdown in prices of the fuel on Thursday, this time below the key $5 mark, after disappointing data on heating demand.

The U.S. Energy Information Administration, or EIA, reported that utilities across America drew 87 billion cubic feet, from natural gas storage for the week ending Dec. 16 versus market expectations for a draw of 93 bcf.

“Even though a major Polar blast will dominate much of the US over the next few days and usher in wind chills to nearly 0 degrees (Fahrenheit) in far southern locations such as Houston, Texas, the [pre-] warm-up appeared to be more of a driver than the bitter cold event,” Gelber & Associates, a Houston-based energy markets consultancy, said in a note to its clients.

Natural gas for January delivery on the New York Mercantile Exchange’s Henry Hub settled down 34.2 cents, or 6.4%, at $4.99 per million metric British thermal units, or MMBtu. It earlier hit a session low of $4.984 per MMBtu – marking a bottom not seen since Oct. 27.

For the past four weeks combined, gas futures have lost about 30%. Prior to that, the market rose almost 20% in the mid-to-late November period on expectations that all of the United States will be in a freezing state during the Christmas week leading into the new year.

The Global Forecast System, the weather forecasting model preferred for the United States, and the ECMWF — the default version used for Europe — are indicating moderating temperatures from the start of next week that could linger into the first week of January. That is opposed to the super cold temperatures the two models initially called for from this Friday through the year-end.

TRADE SUGGESTION- SELL AT 4.975, TAKE PROFIT AT 4.807, SL AT 5.105