Naturalgas settled up 0.45% at 155.20 recovered from the day's low while dropped sharply in the morning session tracking US natural gas prices which tumbled to their lowest level in 3.5 years as expectations of an unusually warm winter heaped more pain on energy producers already reeling from the collapse in oil prices. Early on Tuesday, benchmark Nymex Natural gas dropped as low as $1.948/mBtu, down 5.5% on the day and off a fifth from just a week earlier. The last time US gas dipped below $2 was in 2012 following a balmy winter that was the fourth warmest in recorded history. It previously traded in that range in the last century. The US natural gas market has been transformed over the past five years by a boom in onshore shale production. Bearish speculators are betting on the warm weather reducing early-winter demand for the heating fuel. The heating season from November through March is the peak demand period for US gas consumption. Meanwhile, U.S. supply levels remained in focus. Natural gas supplies in storage increased by 81bcf, according to the EIA, below expectations for an increase of 88 billion. Supplies rose by 100bcf in the prior week, 94bcf in the same week last year, while the five-year average change for the week was an increase of 84bcf. Total U.S. natural gas storage stood at 3.814tcf, 4.5% 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. Technically market is getting support at 152.2 and below same could see a test of 149.2 level, And resistance is now likely to be seen at 158.2, a move above could see prices testing 161.2.

Trading Ideas:

Naturalgas trading range for the day is 149.2-161.2.

Natural gas crashed to a more than three year low as demand for the fuel was likely to remain limited.

Bearish speculators are betting on the warm weather reducing early-winter demand for the heating fuel.

Warm weather for this time of year is threatening to crimp gas demand just as caverns and reservoirs are filling up with supplies.