Investing.com - Natural gas prices settled lower on Friday, as the previous day’s 14% rally to an almost three-week high prompted investors to cash out of the market to lock in gains.
On the New York Mercantile Exchange, natural gas futures for delivery in July settled at USD2.470 per million British thermal units by close of trade on Friday. Earlier in the day, prices touched USD2.557, the highest since May 29.
On the week, prices rallied 8.5%, the first gain in four weeks.
Natural gas prices surged 14% on Thursday, 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.
Inventories rose by 72 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 88 billion cubic feet, according to U.S. Energy Department data.
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 EIA said earlier in the week that it expects demand from utilities to increase by 20% this year, offsetting most of the decline in fuel usage caused by the recent mild winter.
The agency also cut its peak inventory forecast to 4.015 trillion cubic feet from 4.096 trillion cubic feet, easing fears that the industry will run out of storage space. Stocks peaked last year in November at a record high of 3.852 trillion cubic feet.
Some short covering and technical buying further propped up the market after prices broke above key technical resistance close to their 40-day moving average, triggering fresh buy orders amid bullish chart signals.
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 eased Friday after the Federal Reserve said in a report that industrial production dipped by a seasonally adjusted 0.1% in May, defying expectations for a 0.1% increase.
Industrial consumers account for 28% of U.S. gas demand, according to the U.S. Energy Department.
Meanwhile, natural gas traders shrugged off a report from industry group Baker Hughes showing 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.
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 in the energy complex, light sweet crude oil futures for August delivery traded at USD84.33 a barrel by close of trade on Friday, declining 2.45% on the week.
Heating oil for July delivery dropped 3.32% over the week to settle at USD2.646 per gallon by close of trade Friday.
On the New York Mercantile Exchange, natural gas futures for delivery in July settled at USD2.470 per million British thermal units by close of trade on Friday. Earlier in the day, prices touched USD2.557, the highest since May 29.
On the week, prices rallied 8.5%, the first gain in four weeks.
Natural gas prices surged 14% on Thursday, 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.
Inventories rose by 72 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 88 billion cubic feet, according to U.S. Energy Department data.
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 EIA said earlier in the week that it expects demand from utilities to increase by 20% this year, offsetting most of the decline in fuel usage caused by the recent mild winter.
The agency also cut its peak inventory forecast to 4.015 trillion cubic feet from 4.096 trillion cubic feet, easing fears that the industry will run out of storage space. Stocks peaked last year in November at a record high of 3.852 trillion cubic feet.
Some short covering and technical buying further propped up the market after prices broke above key technical resistance close to their 40-day moving average, triggering fresh buy orders amid bullish chart signals.
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 eased Friday after the Federal Reserve said in a report that industrial production dipped by a seasonally adjusted 0.1% in May, defying expectations for a 0.1% increase.
Industrial consumers account for 28% of U.S. gas demand, according to the U.S. Energy Department.
Meanwhile, natural gas traders shrugged off a report from industry group Baker Hughes showing 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.
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 in the energy complex, light sweet crude oil futures for August delivery traded at USD84.33 a barrel by close of trade on Friday, declining 2.45% on the week.
Heating oil for July delivery dropped 3.32% over the week to settle at USD2.646 per gallon by close of trade Friday.