NEW YORK: US natural gas futures, pressured by milder weather forecast for the next few days that should slow demand, ended lower on Monday, but the cooler weather due next week, particularly for the Midwest and South, limited selling.
The weakness followed a 40 percent surge in gas prices since mid-February as cold late-winter weather, a chilly spring and above-average nuclear plant outages whittled down record high inventories seen at the start of the heating season.
While there are still below-normal temperatures in the forecast, traders noted normal highs are on the rise as summer approaches and below-normal readings in May are not likely to trigger much heating or cooling load.
"The market seems to be trying to move lower, but it doesn't have the impetus yet. If we get another better-than-expected storage build (on Thursday), it could corroborate the downtrend," said Jacob Correll, analyst at Schneider Electric.
Front-month gas futures on the New York Mercantile Exchange ended down 3 cents at $4.011 per million British thermal units after sliding early to a one-month low of $3.971.
The front contract, which just hit a 21-month high of $4.444 on Wednesday, lost 2.7 percent last week, its second straight weekly decline after nine consecutive weeks of gains.
Last Thursday's unexpectedly-large inventory build triggered a 7-percent selloff, the biggest one-day drop for the front contract in nine months.
Traders said the report may be a sign that the market was loosening, noting prices above $4 could be dampening demand by encouraging utilities to use more coal to generate power and increasing supply by tempting producers to turn on more wells.
With gas production still flowing at or near record highs and moderating weather likely to slow demand, some traders expect gas prices to remain under pressure, at least until homeowners and businesses crank up air conditioners.
Chart traders noted futures prices have broken above $4.40 several times over the last few weeks only to be driven back by technical selling or profit-taking.
But they also noted decent buying when the front broke below psychological support at $4 in the last two sessions.
The latest National Weather Service eight-to-14-day forecast, issued on Sunday, called for above-normal temperatures for the western half of the nation and the Northeast, with below-normal readings in Texas and normal readings in much of the Midwest and Southeast.
ANOTHER BIG INVENTORY BUILD EXPECTED
Last week's build was only the third injection of the stock building season, but it did exceed market expectations and prices fell sharply immediately after the report.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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