Natural gas futures - weekly outlook: May 4 - 8

Investing.com - Natural gas futures rallied to a five-week high on Friday, as forecasts for warmer weather across the U.S. in the week ahead lifted near-term demand expectations for the fuel.

On the New York Mercantile Exchange, natural gas for delivery in June hit an intraday peak of $2.800 per million British thermal units, the strongest level since March 25, before ending the week at $2.776, up 2.5 cents, or 0.91%.

On Thursday, natural gas surged 14.5 cents, or 5.56%, to end at $2.751. For the week, the June natural gas contract jumped 6.1 cents, or 8.1%.

Futures were likely to find support at $2.557 per million British thermal units, the low from April 30, and resistance at $2.812, the high from March 25.

Updated weather forecasting models called for warmer-than-average weather over much of the Midwest and Northeast, as well as the South in the first two weeks of May, which was likely to boost cooling demand.

Approximately 49% of U.S. households use natural gas for heating, according to the Energy Department.

The U.S. Energy Information Administration said in its weekly report on Thursday that natural gas storage in the U.S. rose by 81 billion cubic feet, below expectations for an increase of 85 billion and following a build of 90 billion cubic feet in the preceding week.

Supplies rose by 77 billion cubic feet in the same week last year, while the five-year average change is an increase of 55 billion cubic feet.

Total U.S. natural gas storage stood at 1.710 trillion cubic feet as of last week, 76.5% above year-ago levels and 4.2% below the five-year average for this time of year.

Last spring, supplies were 55% below the five-year average, indicating producers have made up for all of last winter’s unusually strong demand.

The EIA's next storage report slated for release on Thursday, May 7 is expected to show a build of approximately 70 billion cubic feet for the week ending May 1.

Supplies rose by 68 billion cubic feet in the same week last year, while the five-year average change is an increase of 75 billion cubic feet.

Elsewhere on the Nymex, crude oil for June delivery settled at $59.15 a barrel by close of trade on Friday, up $1.85, or 3.5%, on the week, while heating oil for June delivery rose 2.58% on the week to settle at $1.982 per gallon.