Natural gas futures for delivery in February declined 6.8 cents, or 2.93%, and traded at $2.265 per million British thermal units, according to the data published by the New York Mercantile Exchange.
The pull back was unexpected due to the weather forecasts predicting that the U.S. east coast might be colder in the next week. Natural gas typically increases during the winter season, the peak demand period for U.S. gas consumption, due to the higher heating demand in cold weather.
Analysts expect that the decline in natural gas prices may push coal to lose market share as it becomes more cost-effective for utilities to use natural gas to generate power. It worth mentioning that replacing coal consumption with natural gas reduces greenhouse gas emissions.
Last week, U.S. natural gas storage scored 3.756 trillion cubic feet with is 14.2% higher than levels at this time last year. Excon Fuji Securities expected that storage of January will ease up to show a withdrawal of 100 billion cubic feet for the first week in January. This would be the biggest withdrawal since March 2015 compared to 116 billion cubic feet during the same week a year ago.
Natural gas production slipped in the last year to 635 Bcm (61 Bcf/d), which is the lowest level since 2009.
