NEW YORK—Natural-gas futures tumbled to a three-month low, pressured by a U.S. government report showing a modest withdrawal of the fuel from inventories as milder weather keeps a lid on prices.

Bloomberg News

Natural-gas futures prices have fallen by about 8.5% over the past two weeks after soaring this winter.
.Natural gas for April delivery on the New York Mercantile Exchange settled 18.2 cents lower, or 3.8%, at $4.575 a million British thermal units. The contract fell as low as $4.556/MMBtu earlier in the session, the lowest since early December.

Frigid temperatures boosted gas heating demand and sent prices for the fuel soaring above $6 a million British thermal units this winter, but the approach of spring has driven the front-month contract about 8.5% lower over the past two weeks. As the sluggish U.S. economy continues to depress gas demand and supplies remain ample, support for gas prices is waning.

"Gas prices fell below the key benchmark of $5 just when traders decided to stick a fork in it and say, 'Winter's done,'" said Guy Gleichmann, commodity trade adviser for WaveLength Energy in Pompano Beach, Fla.

MDA EarthSat, a Rockville, Md., private forecaster, was predicting warmer-than-normal temperatures across parts of the northern tier of the U.S. from March 9 through March 18. The National Weather Service forecast above-normal temperatures in the Northeast and Great Lakes region during that period.

A smaller-than-expected withdrawal from gas storage last week sent gas prices sharply lower. The U.S. Energy Information Administration reported a pull from gas storage of 116 billion cubic feet for the week ended Feb. 26, falling short of the 132 billion cubic feet analysts and traders had predicted in a Dow Jones Newswires survey. The withdrawal was greater than last year's 101-bcf pull from storage but below the five-year average draw of 124 billion cubic feet.

.The latest draw brings the total amount of gas in storage to 1.737 trillion cubic feet, 1.2% above the five-year average and 3.9% below last year's level as of Feb. 26.

Improved technology has unleashed a flood of gas supply from onshore shale-rock formations, keeping gas inventories near the five-year average despite an unusually cold winter. Although gas prices are well below their summer 2008 high near $14/MMBtu, producers have been putting rigs back to work.

"There should be more than enough supply for the balance of winter while production continues apace," wrote Mike Fitzpatrick, a broker with MF Global in New York, in a note to clients. "There may be bouts of cold but the bulk of winter is over."

In other commodity markets:

COPPER: Futures dropped as investors moved out of commodities like copper and into the U.S. dollar in search of perceived safety. Traders also were selling copper, which rose sharply earlier in the week, as it's clear there likely won't be any lasting effects on supply from a weekend earthquake in Chile, the world's largest producer of the metal. Nearby March copper fell 5.85 cents to $3.3605 a pound on the Comex division of Nymex.

WHEAT: Disappointing weekly export sales weighed down futures prices. The Agriculture Department said net wheat sales totaled 104,100 metric tons, down 75% from last week and less than half of even the lowest analyst estimate. "U.S. wheat is expensive and with global supplies quite heavy, it's hard to attract world importers," said Sterling Smith, market analyst with Country Hedging in St. Paul, Minn. Declines in other commodity markets, such as crude oil, also contributed to wheat's decline, traders said. Nearby March wheat on the Chicago Board of Trade shed 13 cents to settle at $4.9050 a bushel.

Write to Christine Buurma at christine.buurma@dowjones.com

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