Investing.com - Natural gas futures moved sharply lower Monday, as profit takers took gains from last week’s bullish move
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.423 per million British thermal units during U.S. afternoon trade, tumbling 3.45%.
Natural gas prices surged more than 8% last week, the third consecutive weekly advance. Sentiment on the heating fuel has improved in recent weeks, after hitting a string of fresh 10-year lows for the most part of April.
Prices are up almost 25% since hitting a decade-low of USD1.902 on April 19, amid indications major North American natural gas producers were cutting back on production in response to lower prices.
Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas provided further support over recent sessions.
Market participants also noted that one of the factors supporting the market during the three-week rally was the lack of significant unwinding of long positions, most likely held by legendary natural gas trader John Arnold, who closed his Centaurus Energy master fund in early May.
Furthermore, many gas traders said the market likely bottomed out after sinking to a 10-year spot chart low on April 19.
However, the strong rally prompted some investors to sell their position on profit taking and lock in gains, after futures moved in to over-bought territory while other traders remained concerned over elevated U.S. storage levels.
The U.S. Energy Information Administration said last week that natural gas storage in the U.S. rose by 30 billion cubic feet to 2.606 trillion cubic feet last week, up 44.2% from year ago levels and 44.5% higher than the five-year average.
Early injection estimates for this week’s storage data range from 52 billion cubic feet to 79 billion cubic feet, compared to last year's build of 86 billion cubic feet. The five-year average change for the week is an increase of 91 billion cubic feet.
If weekly stock builds through October match the five-year average, inventories would top out at 4.475 trillion cubic feet, 8.4% over peak capacity estimates of about 4.1 trillion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June tumbled 1.77% to trade at USD94.43 a barrel.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.423 per million British thermal units during U.S. afternoon trade, tumbling 3.45%.
Natural gas prices surged more than 8% last week, the third consecutive weekly advance. Sentiment on the heating fuel has improved in recent weeks, after hitting a string of fresh 10-year lows for the most part of April.
Prices are up almost 25% since hitting a decade-low of USD1.902 on April 19, amid indications major North American natural gas producers were cutting back on production in response to lower prices.
Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas provided further support over recent sessions.
Market participants also noted that one of the factors supporting the market during the three-week rally was the lack of significant unwinding of long positions, most likely held by legendary natural gas trader John Arnold, who closed his Centaurus Energy master fund in early May.
Furthermore, many gas traders said the market likely bottomed out after sinking to a 10-year spot chart low on April 19.
However, the strong rally prompted some investors to sell their position on profit taking and lock in gains, after futures moved in to over-bought territory while other traders remained concerned over elevated U.S. storage levels.
The U.S. Energy Information Administration said last week that natural gas storage in the U.S. rose by 30 billion cubic feet to 2.606 trillion cubic feet last week, up 44.2% from year ago levels and 44.5% higher than the five-year average.
Early injection estimates for this week’s storage data range from 52 billion cubic feet to 79 billion cubic feet, compared to last year's build of 86 billion cubic feet. The five-year average change for the week is an increase of 91 billion cubic feet.
If weekly stock builds through October match the five-year average, inventories would top out at 4.475 trillion cubic feet, 8.4% over peak capacity estimates of about 4.1 trillion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June tumbled 1.77% to trade at USD94.43 a barrel.