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Natural gas futures bounce off 1-week low ahead of U.S. supply data

Published 04/24/2013, 10:02 AM
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Investing.com - Natural gas futures edged modestly higher during U.S. morning hours on Wednesday, as market players continued to monitor shifting weather forecasts for the next couple of weeks in an attempt to gauge near term demand prospects.

On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD4.300 per million British thermal units during U.S. morning trade, up 0.5% on the day.       

Nymex gas prices rose by as much as 0.9% earlier in the day to hit a session high of USD4.319 per million British thermal units.

Natural gas futures fell to a one-week low of USD4.252 per million British thermal units on Tuesday, after weather forecasts pointed to mild U.S. weather through the beginning of May.

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.

Market players now looked ahead to Thursday’s closely-watched U.S. supply data.

Early injection estimates range from 24 billion cubic feet to 48 billion cubic feet. Inventories rose by 43 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a rise of 50 billion cubic feet.

Typically this time of year, stockpiles begin to climb as milder spring temperatures curb demand for natural gas.

Total U.S. natural gas storage stood at 1.704 trillion cubic feet as of last week, 32% lower than last year at this time and 4.2% below the five-year average for this time of year.

Nymex gas prices have risen sharply in recent weeks, gaining almost 35% since mid-February, boosted by calls for colder temperatures in major consuming regions across the U.S. that helped tighten the market and ease concerns over bloated inventory levels.

The June contract rose to a 21-month high of USD4.428 per million British thermal units on April 19.

Still, some analysts have warned that further gains may be limited with spring's low-demand shoulder season looming.

The heating season from November through March is the peak demand period for U.S. gas consumption. Nearly 50% of all U.S. households use gas for heating.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June added 0.8% to trade at USD89.91 a barrel, while heating oil for May delivery added 0.25% to trade at USD2.818 per gallon.

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