Forexpros – Natural gas futures added to heavy losses during U.S. morning trade on Thursday, pulling further away from a three-month high after a report from the U.S. Energy Information Administration showed U.S. gas supplies rose more-than-expected last week.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.526 per million British thermal units during U.S. morning trade, tumbling 3.5%.
It earlier rose by as much as 1.6% to trade at USD2.674 per million British thermal units, the highest since February 27.
The June contract traded at USD2.581 prior to the release of the U.S. Energy Information Administration report.
The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended May 11 rose by 61 billion cubic feet, above expectations for an increase of 55 billion cubic feet.
Inventories rose by 86 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 91 billion cubic feet, according to U.S. Energy Department data.
Total U.S. natural gas storage stood at 2.667 trillion cubic feet as of last week. Stocks were 774 billion cubic feet higher than last year at this time and 773 billion cubic feet above the five-year average of 1.894 trillion cubic feet for this time of year.
The report showed that in the East Region, stocks were 393 billion cubic feet above the five-year average, following a net injection of 47 billion cubic feet.
Stocks in the Producing Region were 282 billion cubic feet above the five-year average of 763 billion cubic feet, after a net injection of 7 billion cubic feet.
Some profit taking also weighed on the fuel, after surging to a three-month high earlier in the session.
Sentiment on the heating fuel has improved in recent weeks after hitting a string of fresh 10-year lows.
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. U.S. power companies used 34% more gas in February than a year earlier, Energy Department data showed.
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.
Despite the recent rally, prices remain vulnerable to a downside correction in the near-term as traders remain concerned over elevated U.S. storage levels.
If weekly stock builds through October match the five-year average, inventories would top out at 4.532 trillion cubic feet, 9% over peak capacity estimates of about 4.1 trillion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June rose 0.45% to trade at USD93.25 a barrel, while heating oil for June delivery dipped 0.3% to trade at USD2.889 per gallon.
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