Investing.com - Natural gas futures traded sharply higher Tuesday, adding to Monday’s strong gains, as speculation over potential supply cuts overshadowed mild weather and record-high inventory levels.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.365 per million British thermal units during U.S. afternoon trade, surging 3.52%.
Natural gas prices have rallied almost 14% in the past six sessions leading up to Monday, since falling to a ten-year low of USD1.902 on April 19.
Sentiment on the heating fuel has improved in recent sessions after prices hit a string of 10-year lows amid speculation that lower prices would lead to production cuts.
A report from industry research group Baker Hughes Friday showed that that the number of active rigs drilling for natural gas in the U.S. fell by 18 last week to 613, the lowest since April 2002. The gas rig count is down by almost 35% since peaking at 936 in October.
The steady decline in rigs drilling for natural gas in the U.S. has fuelled speculation that major North American natural gas producers will begin to curb output in response to declining prices.
However, the rally prompted some investors to sell their position on profit taking and lock in gains, as traders remained concerned over elevated U.S. storage levels.
Last week’s storage data from the U.S. Energy Information Administration showed that natural gas storage rose by 47 billion cubic feet to 2.548 trillion. However, the report showed that the previous week’s inventory level was revised down by 11%, supporting prices.
However, storage levels are still 52% above last year’s level and almost 56% higher than the five-year average for this time of year, fuelling concerns that U.S. gas supplies will reach total storage capacity by October.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June jumped 1.16% to trade at USD106.08 a barrel, while heating oil for June delivery inched up 0.16% to trade at USD3.190 per gallon.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.365 per million British thermal units during U.S. afternoon trade, surging 3.52%.
Natural gas prices have rallied almost 14% in the past six sessions leading up to Monday, since falling to a ten-year low of USD1.902 on April 19.
Sentiment on the heating fuel has improved in recent sessions after prices hit a string of 10-year lows amid speculation that lower prices would lead to production cuts.
A report from industry research group Baker Hughes Friday showed that that the number of active rigs drilling for natural gas in the U.S. fell by 18 last week to 613, the lowest since April 2002. The gas rig count is down by almost 35% since peaking at 936 in October.
The steady decline in rigs drilling for natural gas in the U.S. has fuelled speculation that major North American natural gas producers will begin to curb output in response to declining prices.
However, the rally prompted some investors to sell their position on profit taking and lock in gains, as traders remained concerned over elevated U.S. storage levels.
Last week’s storage data from the U.S. Energy Information Administration showed that natural gas storage rose by 47 billion cubic feet to 2.548 trillion. However, the report showed that the previous week’s inventory level was revised down by 11%, supporting prices.
However, storage levels are still 52% above last year’s level and almost 56% higher than the five-year average for this time of year, fuelling concerns that U.S. gas supplies will reach total storage capacity by October.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June jumped 1.16% to trade at USD106.08 a barrel, while heating oil for June delivery inched up 0.16% to trade at USD3.190 per gallon.