Investing.com - Natural gas prices rose in choppy trade on Friday, as investors readjusted positions ahead of the expiration of the February contract amid expectations for a near-term lift in heating demand.
On the New York Mercantile Exchange, natural gas futures for delivery in February settled at USD2.678 per million British thermal units by close of trade on Friday, which was when the contract expired.
Contract expirations often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.
Meanwhile, the more actively traded contract for March delivery traded at USD2.774 per million British thermal units by close of trade Friday, soaring 16.4% on the week, the largest weekly advance since September 2009.
Natural gas prices received a boost Friday after industry weather group MDA EarthSat said that it expected colder-than-normal weather throughout most of the U.S. east coast and southern states in the next 11-to-15 days.
The Commodity Weather Group offered a similar outlook, saying that temperatures were forecast to cool along the east coast and south in its 11-to-15 day forecast.
This is typically the coldest time in winter, but temperatures in the U.S. have yet to reach levels cold enough to boost demand for the heating fuel, keeping prices depressed at unseasonably low levels.
Last week, gas prices fell as low as USD2.319 per million British thermal units, the lowest since February 2002.
Prices came under pressure on Thursday, despite a report from the U.S. Energy Information Administration showing that natural gas inventories declined significantly last week.
In its weekly report, the EIA said that natural gas storage in the U.S. fell by 192 billion cubic feet in the preceding week. The drawdown was above the 184 billion cubic feet withdrawn in the same week a year earlier. It also topped the five-year average withdrawal of 173 billion cubic feet for the week.
The sizeable decline was likely due to a recent bout of cold weather and increased use of natural gas by power plants, according to a report from U.S. lender Citigroup.
Despite the supply drop, inventories remain at their highest level ever for this time of year. Total U.S. natural gas storage stood at 3.098 trillion cubic feet as of last week.
Stocks were 531 billion cubic feet higher than last year at this time and 547 billion cubic feet above the five-year average of 2.551 trillion cubic feet for this time of year.
Natural gas prices rallied nearly 18.5% in the three sessions leading up to Thursday, after production-cut announcements by major U.S. natural gas producers sparked a massive short-covering rally.
Chesapeake Energy, which produces approximately 9% of U.S. natural gas, said earlier in the week that it planned to “immediately curtail” 0.5 billion cubic feet a day of gas production, or nearly 8% of its total output.
Also providing support were updates on production plans from Occidental Petroleum and ConocoPhillips.
Occidental Petroleum announced that it will cut back on pure gas drilling due to “horrible” natural gas prices and ConocoPhillips said it continues to limit investments in North American natural gas production.
The production-cut announcements prompted investors to take profits generated from bets on falling prices, a move known as covering a short position.
Despite the strong weekly gain, natural gas prices are still down nearly 22% since the beginning of December.
Elsewhere on the NYMEX, light sweet crude oil futures for March delivery traded at USD99.71 a barrel by close of trade on Friday, climbing 2.1% on the week, while heating oil for February delivery gained 2.7% over the week to settle at USD3.075 per gallon by close of trade Friday.
On the New York Mercantile Exchange, natural gas futures for delivery in February settled at USD2.678 per million British thermal units by close of trade on Friday, which was when the contract expired.
Contract expirations often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.
Meanwhile, the more actively traded contract for March delivery traded at USD2.774 per million British thermal units by close of trade Friday, soaring 16.4% on the week, the largest weekly advance since September 2009.
Natural gas prices received a boost Friday after industry weather group MDA EarthSat said that it expected colder-than-normal weather throughout most of the U.S. east coast and southern states in the next 11-to-15 days.
The Commodity Weather Group offered a similar outlook, saying that temperatures were forecast to cool along the east coast and south in its 11-to-15 day forecast.
This is typically the coldest time in winter, but temperatures in the U.S. have yet to reach levels cold enough to boost demand for the heating fuel, keeping prices depressed at unseasonably low levels.
Last week, gas prices fell as low as USD2.319 per million British thermal units, the lowest since February 2002.
Prices came under pressure on Thursday, despite a report from the U.S. Energy Information Administration showing that natural gas inventories declined significantly last week.
In its weekly report, the EIA said that natural gas storage in the U.S. fell by 192 billion cubic feet in the preceding week. The drawdown was above the 184 billion cubic feet withdrawn in the same week a year earlier. It also topped the five-year average withdrawal of 173 billion cubic feet for the week.
The sizeable decline was likely due to a recent bout of cold weather and increased use of natural gas by power plants, according to a report from U.S. lender Citigroup.
Despite the supply drop, inventories remain at their highest level ever for this time of year. Total U.S. natural gas storage stood at 3.098 trillion cubic feet as of last week.
Stocks were 531 billion cubic feet higher than last year at this time and 547 billion cubic feet above the five-year average of 2.551 trillion cubic feet for this time of year.
Natural gas prices rallied nearly 18.5% in the three sessions leading up to Thursday, after production-cut announcements by major U.S. natural gas producers sparked a massive short-covering rally.
Chesapeake Energy, which produces approximately 9% of U.S. natural gas, said earlier in the week that it planned to “immediately curtail” 0.5 billion cubic feet a day of gas production, or nearly 8% of its total output.
Also providing support were updates on production plans from Occidental Petroleum and ConocoPhillips.
Occidental Petroleum announced that it will cut back on pure gas drilling due to “horrible” natural gas prices and ConocoPhillips said it continues to limit investments in North American natural gas production.
The production-cut announcements prompted investors to take profits generated from bets on falling prices, a move known as covering a short position.
Despite the strong weekly gain, natural gas prices are still down nearly 22% since the beginning of December.
Elsewhere on the NYMEX, light sweet crude oil futures for March delivery traded at USD99.71 a barrel by close of trade on Friday, climbing 2.1% on the week, while heating oil for February delivery gained 2.7% over the week to settle at USD3.075 per gallon by close of trade Friday.