On the New York Mercantile Exchange, natural gas futures for delivery in September traded at USD2.844 per million British thermal units during U.S. morning trade, falling 1.16%.
Temperatures across much of the U.S. are seen to be pulling back from higher-than-average levels hit earlier this summer.
Warmer-than-normal temperatures increase the need for gas-fired electricity to power air conditioning, boosting demand for natural gas. Natural gas accounts for about a quarter of U.S. electricity generation.
A bout of hot weather across much of the U.S. over the past several weeks had prompted power generators to burn more of the fuel to meet demand, easing a storage glut and pushing prices to the highest levels of 2012.
But data on Thursday showing that natural gas storage levels rose more-than-expected last week sparked a sell-off in the commodity, amid concerns over a supply overhang.
The Energy Information Administration said that natural gas in storage grew by 28 billion cubic feet to 3.217 trillion cubic feet for the week ended July 27.
Analysts had forecast an increase of 23 billion to 3.167 trillion cubic feet.
Total natural gas inventories are now 14.5% above the five-year average of 2.810 trillion cubic feet for this week and 17.2% above last year’s level of 2.745 trillion cubic feet, according to the government data.
The increase last week compares with an addition of 43 billion cubic feet a year ago and a five-year average build of 56 billion cubic feet.
Stockpiles rose to 60% above the five-year average in March, after a mild winter cut demand for natural gas to heat homes and businesses, sparking fears that supplies would exceed available storage capacity by the end of the year.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in September were up 0.58% to USD91.94 a barrel, while heating oil for September delivery gained 0.41% to trade at USD2.9381 per gallon
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