Investing.com - Natural gas futures spiked higher Tuesday, advancing for a second session, on heavy demand speculation and bottom fishing buying.
On the New York Mercantile Exchange, natural gas futures for delivery in September traded at USD2.954 per million British thermal units during U.S. afternoon trade, spiking 1.85%.
A bout of hot weather across much of the U.S. over the past several weeks had prompted power generators to burn more of the fuel to meet demand, easing a storage glut and pushing prices to the highest levels of 2012 early last week.
But a report from the U.S. Energy Information Administration on Thursday showing a larger-than-expected increase in natural gas storage levels sparked a steep sell-off.
The EIA said that natural gas in storage grew by 28 billion cubic feet to 3.217 trillion cubic feet for the week ended July 27.
Analysts had forecast an increase of 23 billion to 3.167 trillion cubic feet.
Total natural gas inventories are now 14.5% above the five-year average of 2.810 trillion cubic feet for the week and 17.2% above last year’s level of 2.745 trillion cubic feet, according to the government data.
Stockpiles rose to 60% above the five-year average in March, after a mild winter cut demand for natural gas to heat homes and businesses, sparking fears that supplies would exceed available storage capacity by the end of the year.
Natural gas prices looked likely to remain supported amid hopes that hot weather could bolster the outlook for gas-fired utility demand.
Meanwhile, the most active period in the Atlantic hurricane season has arrived, fuelling concerns that storms in the Gulf of Mexico could disrupt supplies from the region.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in September were up 0.81% to USD92.94 a barrel, while heating oil for September delivery jumped 1.27% to trade at USD2.978 per gallon.