Investing.com - Natural gas futures regained strength during U.S. morning hours on Monday, as forecasts for warmer weather across key parts of the U.S. boosted near-term demand expectations for the fuel.
On the New York Mercantile Exchange, natural gas futures for delivery in July traded at USD2.517 per million British thermal units during U.S. morning trade, jumping 2%.
It earlier rose by as much as 2.7% to trade at a session high of USD2.534 per million British thermal units. Prices touched USD2.554 on Friday, the highest since May 29.
Natural gas futures recovered from Friday’s losses as warmer weather forecasts across most parts of the U.S. in the coming week provided support.
The National Weather Service's six- to 10-day outlook issued on Sunday called for above-normal readings for most of the U.S., with below-normal readings along the West Coast and in New England.
Warmer-than-normal temperatures increase the need for gas-fired electricity to power air conditioning, boosting demand for natural gas. Natural gas accounts for about a quarter of U.S. electricity generation.
Indications that North American gas producers were cutting back on production in response to lower prices also contributed to gains.
Industry research group Baker Hughes said on Friday that the number of active rigs drilling for natural gas in the U.S. last week fell by three to 562, the lowest since September 1999.
The gas rig count is nearly 40% below last year’s level, fuelling hopes that major North American natural gas producers were beginning to curb output in response to declining prices.
Despite lower production levels, U.S. gas inventories remain at a record high for this time of year, after one of the warmest winters on record reduced demand for the heating fuel during its peak season.
Some chart buying further supported the market after prices broke above key technical resistance close to their 40-day moving average in the previous session.
Natural gas prices surged 14% on June 14, the largest one-day gain in more than two years after the U.S. Energy Information Administration said that natural gas storage in the U.S. rose by 67 billion cubic feet last week, below market expectations for an increase of 75 billion cubic feet.
Total U.S. gas supplies stood at 2.944 trillion cubic feet last week, narrowing the surplus to 32% above last year's level and 29% above the five-year average level for that week.
The smaller-than-expected increase indicated that demand for the fuel is better-than-expected and suggested that demand for natural gas among power utilities remains strong.
The weekly gas report has been “bullish” in nine of the past 10 weeks, raising expectations that record-high storage can be trimmed to more manageable levels in the 22 weeks left before winter withdrawals begin.
Early injection estimates for this week’s storage data range from 47 billion cubic feet to 72 billion cubic feet, compared to last year's build of 90 billion cubic feet. The five-year average change for the week is an increase of 87 billion cubic feet.
Prices have been on the decline since touching a three-month high of USD2.820 on May 21. Despite the recent run of losses, natural gas prices are still up 23% since touching a decade-low of USD1.902 on April 19, amid indications major North American natural gas producers were cutting back on production.
Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas provided further support over recent weeks.
However, market players noted that sustained prices back above USD2.50 and toward the USD3.00-level likely would inspire some switching back to coal.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in August dropped 1.25% to trade at USD83.27 a barrel, while heating oil for July delivery slumped 0.9% to trade at USD2.623 per gallon.
On the New York Mercantile Exchange, natural gas futures for delivery in July traded at USD2.517 per million British thermal units during U.S. morning trade, jumping 2%.
It earlier rose by as much as 2.7% to trade at a session high of USD2.534 per million British thermal units. Prices touched USD2.554 on Friday, the highest since May 29.
Natural gas futures recovered from Friday’s losses as warmer weather forecasts across most parts of the U.S. in the coming week provided support.
The National Weather Service's six- to 10-day outlook issued on Sunday called for above-normal readings for most of the U.S., with below-normal readings along the West Coast and in New England.
Warmer-than-normal temperatures increase the need for gas-fired electricity to power air conditioning, boosting demand for natural gas. Natural gas accounts for about a quarter of U.S. electricity generation.
Indications that North American gas producers were cutting back on production in response to lower prices also contributed to gains.
Industry research group Baker Hughes said on Friday that the number of active rigs drilling for natural gas in the U.S. last week fell by three to 562, the lowest since September 1999.
The gas rig count is nearly 40% below last year’s level, fuelling hopes that major North American natural gas producers were beginning to curb output in response to declining prices.
Despite lower production levels, U.S. gas inventories remain at a record high for this time of year, after one of the warmest winters on record reduced demand for the heating fuel during its peak season.
Some chart buying further supported the market after prices broke above key technical resistance close to their 40-day moving average in the previous session.
Natural gas prices surged 14% on June 14, the largest one-day gain in more than two years after the U.S. Energy Information Administration said that natural gas storage in the U.S. rose by 67 billion cubic feet last week, below market expectations for an increase of 75 billion cubic feet.
Total U.S. gas supplies stood at 2.944 trillion cubic feet last week, narrowing the surplus to 32% above last year's level and 29% above the five-year average level for that week.
The smaller-than-expected increase indicated that demand for the fuel is better-than-expected and suggested that demand for natural gas among power utilities remains strong.
The weekly gas report has been “bullish” in nine of the past 10 weeks, raising expectations that record-high storage can be trimmed to more manageable levels in the 22 weeks left before winter withdrawals begin.
Early injection estimates for this week’s storage data range from 47 billion cubic feet to 72 billion cubic feet, compared to last year's build of 90 billion cubic feet. The five-year average change for the week is an increase of 87 billion cubic feet.
Prices have been on the decline since touching a three-month high of USD2.820 on May 21. Despite the recent run of losses, natural gas prices are still up 23% since touching a decade-low of USD1.902 on April 19, amid indications major North American natural gas producers were cutting back on production.
Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas provided further support over recent weeks.
However, market players noted that sustained prices back above USD2.50 and toward the USD3.00-level likely would inspire some switching back to coal.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in August dropped 1.25% to trade at USD83.27 a barrel, while heating oil for July delivery slumped 0.9% to trade at USD2.623 per gallon.