Naturalgas settled down -1.2% at 262.90 extended losses from the previous session on Monday, as market players focused on near-term weather forecasts in the U.S. to gauge the strength of demand for the heating fuel. Trade was expected to remain subdued as floor trading on the Nymex was to remain closed for the Martin Luther King Jr. holiday. Updated weather forecasting models called for frigid temperatures to give way to a thawing trend across a good portion of the eastern U.S. in the coming week. Bearish speculators are betting that the mild weather will decrease demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption. U.S. supply levels also remained in focus. Nymex gas prices rallied last week after the U.S. EIA said that natural gas supplies dropped by a record-high 287bcf. The previous record drop was a decrease of 285bcf in the seven days ended December 13, EIA data show. Total U.S. natural gas storage stood at 2.530tcf as of last week, approximately 15% below the five-year average for this time of year. Natural gas inventories have fallen by 1.3tcf, or 34%, since November 8 as frigid winter temperatures in the U.S. led households to burn a higher than normal amount of the fuel in furnaces to heat their homes. Some market player expect supplies at the end of the winter heating season in March to be at their lowest in six years. Technically market is getting support at 261.1 and below same could see a test of 259.4 level, And resistance is now likely to be seen at 264.9, a move above could see prices testing 267.

Trading Ideas:

Naturalgas trading range for the day is 259.4-267.

Natural gas dropped as market players focused on near-term weather forecasts in the U.S. to gauge the strength of demand for the heating fuel.

Bearish speculators are betting that the mild weather will decrease demand for the heating fuel.

Updated weather forecasting models called for frigid temperatures to give way to a thawing trend in the coming week.