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Natural gas plunges as warmer weather trumps supply concern

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Natural gas futures tumbled five percent Thursday as forecasts for above normal temperatures across much of the United States over the next week trumped a government report showing a slightly bigger than expected withdrawal of gas from storage last week.

NYMEX February natural gas futures settled at a one-month low of $4.005 per million British thermal units, off 21.1 cents.

The big drop came in the same week that natural gas registered two back-to-back record demand days, as a fierce cold front swept the Midwest, the south and along the east coast.

Commodities tomorrow: Nat gas plummets

Expectations now are for above-normal temperatures in the Midwest and Northeast markets over the next six to 10 days. The big sell off Thursday came in the same week that natural gas demand hit record levels, on both Monday and Tuesday.

Platts' Bentek Energy said natural gas delivered to consumers across the U.S. Tuesday hit 134.3 billion cubic feet per day, surpassing Monday's record 130.4 Bcf/d. Demand was highest in the Northeast where residential and commercial demand jumped 30 percent from Monday's level.

Prices have fallen 7 percent over the past three sessions, even though Energy Information Administration data showed a big draw from storage in the week ended Jan. 3. Supplies of natural gas fell 157 billion cubic feet, slightly more than expected.

Total stocks now stand at 2.817 trillion cubic feet, down 528 billion cubic feet from a year ago and 315 billion cubic feet below the five-year average.

—By CNBC's Sharon Epperson. Follow her on Twitter: