Investing.com - U.S. natural gas prices edged higher in choppy trade on Wednesday, as market players continued to weigh shifting weather forecasts to assess the outlook for U.S. demand and supply levels.
Natural gas for delivery in December on the New York Mercantile Exchange tacked on 1.5 cents, or 0.65%, to trade at $2.335 per million British thermal units during U.S. morning hours.
A day earlier, natural gas prices rose 2.0 cents, or 0.87%, as forecasts showed a return to cool weather after a warm spell in the eastern U.S. next week.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early-winter heating demand.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Meanwhile, U.S. supply levels remained in focus. Natural gas supplies in storage rose by 52 billion cubic feet last week, according to the Energy Information Administration, below expectations for an increase of 60 billion.
That compared with builds of 63 billion cubic feet in the prior week, 91 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 68 billion cubic feet.
Total U.S. natural gas storage stood at 3.929 trillion cubic feet, 3.9% above the five-year average for this time of year and almost 10% higher than levels at this time a year ago.
Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter’s unusually strong demand.
Stockpiles are set to reach a record by the end of this month. The EIA sees storage levels peaking at 3.956 trillion in November, which would top the November 2012 high of 3.929 trillion.
The North American natural-gas market has been mired in a supply glut for years amid robust output.
Industry research group Baker Hughes (N:BHI) said late Friday that the number of rigs drilling for natural gas in the U.S. increased by two last week to 199. Natural gas traders closely watch the rig count to gauge future supply growth.
The EIA's next storage report slated for release on Friday, November 13 is expected to show a build of approximately 45 billion cubic feet for the week ending November 6.
Supplies rose by 40 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 30 billion cubic feet.
The report comes out one day later than usual due to Wednesday's Veterans Day's holiday in the U.S.
Elsewhere on the Nymex, crude oil for delivery in December shed 54 cents, or 1.22%, to trade at $43.67 a barrel, while heating oil for December delivery dipped 0.34% to trade at $1.481 per gallon.