Investing.com - U.S. natural gas futures rallied towards a seven-week high on Wednesday, as traders looked ahead to fresh weekly information on U.S. gas inventories to gauge the strength of demand for the fuel.
The U.S. Energy Information Administration's storage report slated for release on Thursday is expected to show a withdrawal of approximately 20 billion cubic feet for the week ending March 25.
That compares with a build of 15 billion cubic feet in the prior week and a five-year average decline of around 25 billion for this time of year.
Total U.S. natural gas in storage currently stands at 2.493 trillion cubic feet, 40.8% higher than levels at this time a year ago and 34.0% above the five-year average for this time of year.
Some market experts worry that stockpiles at the end of March will hit at an all-time high of around 2.5 trillion cubic feet, topping the end-of-withdrawal-season high of 2.369 set in 2012.
Natural gas for delivery in May on the New York Mercantile Exchange jumped to an intraday peak of $2.015 per million British thermal units, a level not seen since February 12, before trading at $1.997 by 13:42GMT, or 9:42AM ET, up 1.6 cents, or 0.81%.
A day earlier, natural gas futures rallied 4.5 cents, or 2.32%, amid increased demand expectations.
Midwestern and Northeastern temperatures are expected to fall below normal into the first week in April amid a late season cold front, while a fast warm-up in the west is expected to drive cooling demand.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on late-winter heating demand.
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.
The heating season from November through March is the peak demand period for U.S. gas consumption. However, a warmer-than-normal winter due to the El Niño weather pattern has limited the amount of heating days and reduced demand for the fuel.
Natural gas futures are down nearly 22% so far this year as weak winter heating demand, near-record production and record-high storage levels dragged down prices.
Elsewhere on the Nymex, crude oil for delivery in May jumped $1.11, or 2.9%, to trade at $39.39 a barrel, while heating oil for May delivery soared 2.99% to trade at $1.202 per gallon.