NEW YORK, June 5 (Reuters) - Trading in natural gas futures on the New York Mercantile Exchange has tapered off sharply over the last few days, slipping Tuesday to its lowest so far this year as investors struggle with uncertainty about the market's next move.
Data posted on the CME Group website on Wednesday showed that the prior day's trading totaled just 184,724 contracts, its lowest since languishing below 160,000 lots just before the New Year's Day holiday.
Daily activity has fallen well below the current 30-session average of about 305,000 lots and the 250-session average of nearly 370,000 contracts.
The drop in trade has seen front-month gas futures waffling on either side of $4 per million British thermal units as traders puzzle over the next move in prices.
"I think a lot of people believe prices will move higher as we get into summer, but there's no bullishness right now from heat or hurricanes that would prompt people to jump in," said Matt Smith, commodity analyst at Schneider Electric in Kentucky.
"There's a lot of trepidation about prices, and that's being reflected in the volumes," Smith added.
Cold late-winter weather and a chilly spring helped drive gas prices up to a 21-month high of $4.444 in early May but prices have since pulled back and seem stuck in a broad range between $3.90 and $4.30, with traders waiting to see which way prices will ultimately break.
"Natural gas market participants continue to look for a new signal for guidance for the next directional move in prices," Dominick Chirichella, partner at Energy Management Institute, said in a morning report.
A potential storm in the Gulf of Mexico this week served as a bullish reminder that the Atlantic hurricane season was just starting. But the temperature forecast for June looks set to fall well below the heat of last year at this time, meaning the summer cooling season could get off to a slow start.
With production still running at or near a record high, traders said the gas market was likely to remain well supplied until a broader-based heat wave forces homeowners and businesses to crank up their air conditioners and their electric bills.