Natural gas struggles near recent lows on warm December outlook

U.S. natural gas prices struggled on Monday, as mild weather and healthy stockpiles continued to weigh on the fuel.Natural gas for delivery in January on the New York Mercantile Exchange dipped 0.1 cents, or 0.02%, to trade at $2.212 per million British thermal units during U.S. morning hours. On Friday, natural gas sank 8.7 cents, or 3.78%.Natural gas plunged 18.8 cents, or 7.83%, last week, as weather forecasts for early December pointed to mild temperatures. For the month, prices of the heating fuel are down 4.5%.Natural gas futures have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early-winter heating demand.Bearish speculators are betting on the mild 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.Prices of the fuel typically rise ahead of the winter as colder weather sparks heating demand. But a mild start to the winter heating season underlined concerns over a deepening supply glut, sending prices to four-year lows near $2.00 per million British thermal units at the end of October.Meanwhile, U.S. supply levels remained in focus. Natural gas supplies in storage increased by 9 billion cubic feet last week, according to the U.S. Energy Information Administration, above expectations for a build of 5 billion.That compared with a build of 15 billion cubic feet in the prior week, a withdrawal of 141 billion cubic feet in the same week last year, while the five-year average change for the week is a drawdown of 36 billion cubic feet.Inventories of the gas are typically built up during the warm summer months and then drawn down in the winter as cold temperatures increase demand for the fuel.But market experts warned that stockpile buildups will probably continue for at least another week, two weeks beyond what is normal, due to tepid winter heating demand so far.Total U.S. natural gas storage stood at an all-time high of 4.009 trillion cubic feet, 13.8% higher than levels at this time a year ago and 6.3% above the five-year average for this time of year.Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter’s unusually strong demand.The EIA's next storage report slated for release on Thursday, December 3 is expected to show a build of approximately 5 billion cubic feet for the week ending November 27.That compared with a withdrawal of 22 billion cubic feet in the same week last year, while the five-year average change for the week is a draw of 11 billion cubic feet.Elsewhere on the Nymex, crude oil for delivery in January rose 45 cents, or 1.09%, to trade at $42.16 a barrel, while heating oil for December delivery inched up 0.04% to trade at $1.401 per gallon.