Investing.com - Natural gas futures bounced from decade lows as bottom fishing speculators attempt to purchased the heating fuel at the bottom
On the New York Mercantile Exchange, natural gas futures for delivery in May traded at USD2.11 per million British thermal units during U.S. afternoon trade gaining 1.22%.
It earlier fell by as much as 1.75% to trade at USD2.066 per million British thermal units, the lowest since February 2002.
NYMEX electronic and floor trading was closed on Friday in observance of the Good Friday holiday.
Natural gas prices came under heavy selling pressure early in the session as the bearish sentiment on the heating fuel remained intact amid ongoing concerns over elevated U.S. storage levels.
Weekly storage data from the U.S. released last week showed that natural gas storage in the U.S. rose by 42 billion cubic feet last week, the third consecutive seasonal injection of natural gas for the year.
Total U.S. natural gas storage stood at 2.479 trillion cubic feet as of last week, 56% above year-ago levels and 61% higher than the five-year average for this time of year.
U.S. gas inventories ended the winter at a record high 2.5 trillion cubic feet, about 60% above normal and well above the previous March 31 high of 2.148 trillion set in 1983.
But prices recovered, moving off the ten-year low as traders closed out bets on lower prices after futures moved into oversold territory, a move known as covering a short position.
Natural gas prices have plunged almost 20% since the beginning of March and are down nearly 30% since the start of 2012 as market sentiment has been dominated for months by concerns over elevated U.S. storage levels and mild winter weather that has limited demand for the fuel.
Natural gas traders expect the near-term downtrend in prices to continue amid indications demand for the heating fuel will remain weak in the near-term.
Weather service provider AccuWeather said late last week that it expects temperatures in the U.S. Northeast to average above normal for the next five days, then cool to slightly below normal by early next week.
But traders noted that the slightly below-normal readings for mid-April would not be enough to generate significant demand.
The U.S. gas market is entering the so-called shoulder season. Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.
Some market analysts expect prices to drop even further and test the USD2.00-level amid expectations gas stockpiles will continue to rise throughout the next few months as demand weakens.
Early injection estimates for this week’s storage data range from 11 billion cubic feet to 45 billion cubic feet, compared to last year's build of 7 billion cubic feet. The five-year average change for the week is an increase of 22 billion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in May tumbled 0.82% to trade at USD102.47 a barrel.