US natural gas futures lost 2.7 percent on Tuesday on weak crude oil prices and warmer weather forecasts for the next two weeks. Front-month gas futures on the New York Mercantile Exchange closed down 10 cents at $3.619 per million British thermal units. US crude oil prices for the front-month fell to a fresh five-year low of $53.60 per barrel earlier Tuesday before ending up 2 cents at $55.93.
US weather models for the next two weeks in the lower 48 states turned warmer by midday Tuesday. The models projected heating degree days would total 416 over the next two weeks, down from the 427 forecast earlier Tuesday and well below the 442 norm for this time of year, according to Thomson Reuters Analytics.
With little cold weather so far this season, production remained near record levels because gas was not being trapped in frozen wells and new pipelines have entered service to move more of the fuel out of the ground. Production forecasts held at 72.8 billion cubic feet per day, the same as Monday, according to Thomson Reuters Analytics. That compares with 66.5 bcfd a year ago and a 30-day moving average of 71.8 bcfd. Production hit a record 73.4 bcfd on December 8.
Consumption was expected to rise to 78.8 bcfd on Wednesday from 75.0 bcfd on Tuesday, Thomson Reuters Analytics said. That compares with 93.4 bcfd a year ago and a 30-year average of 86.5 bcfd. On the NYMEX, the premium of heating oil over gas fell to a four-year low.
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