LONDON (Commodity Online): The price of natural gas will likely remain within a $ 3.5 to $ 4.25 range as coal to gas switching would be negatively impacted above $ 4.25 because natural gas needs to remain competitive against US coal, Saxo Bank said in a report.

Forecasters are expecting the coming US winter to be colder than last year, which should help support prices as stockpiles will be reduced, especially during January and February when gas consumption for heating peaks.

Last winter was the fourth warmest on record and it helped trigger the collapse in natural gas prices earlier this year as inventories were not withdrawn at the normal speed.

This raised worries that maximum storage capacity would be breached during this year's injection season from April to November. As we all know, this did not materialise as an unprecedented switch from coal to natural gas helped stabilize prices and inventory levels.

Inadvertently, this switch from dirty to cleaner fuel has made the US the 2012 global champion of reducing carbon emissions. The EIA estimates that this year’s expected CO2 emissions will drop to the lowest level in 20 years and will be 14 percent below their 2007 peak. Natural gas emits less than half the carbon per energy unit than coal and the reduction in the use of coal has been unprecedented.

US Natural Gas was another strongly performing commodity. It rallied particularly before the weekly inventory data from the Energy Information Administration (EIA) which showed the first decline of the season as below-normal temperatures have increased demand.

The withdrawal of 18 billion cubic feet from underground storage was the earliest seasonal decline since 2007 compared with a five-year average injection of 17 billion cubic feet for this particular week.