NEW YORK (Dow Jones)--Natural gas futures tracked volatile crude oil prices closely on Tuesday, pivoting around $3.48 a million British thermal units as abundant supplies and mild weather in the U.S. Northeast placed downward pressure on prices.
Natural gas for August delivery on the New York Mercantile Exchange was trading 3 cents, or 0.86%, lower at $3.457 a million British thermal units after opening floor trade less than a penny lower at $3.482/MMBtu.
Gas was closely following Nymex crude oil, which was choppy on technical trading. Natural gas can be used as a substitute for petroleum products in some power plants and heating systems.
"We are due for a correction, but...it's likely to be a bumpy ride," said Drew Wozniak, an analyst with ICAP Energy in Louisville, Ky.
Nymex light, sweet crude oil for August delivery was trading 28 cents, or 0.44%, lower at $63.77 a barrel Tuesday.
"Gas is starting to show some downward momentum now that selling pressure in the rest of the complex has combined with the weak fundamentals for gas," wrote Mike Fitzpatrick, a broker with MF Global in New York, in a note to clients Tuesday.
Forecasts of moderate temperatures in some of the major gas-consuming regions were pressuring gas prices Tuesday. The relatively cool weather was expected to limit the demand for natural gas.
The National Weather Service was predicting below-normal temperatures in the Northeast and Upper Midwest from July 12 to July 20. But above-normal temperatures were expected across most of the southern tier of the U.S.
Traders were also eyeing ample gas supplies. Total gas in storage as of June 26 was 2.721 trillion cubic feet, 20.7% above the five-year average and 29.2% above last year's level.
-By Christine Buurma, Dow Jones Newswires; 212-416-2143; christine.buurma@dowjones.com