Forexpros – Natural gas futures added to sharp gains during U.S. morning trade on Thursday, following a report from the U.S. Energy Information Administration showing U.S. gas supplies rose slightly less-than-expected last week.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.347 per million British thermal units during U.S. morning trade, surging 4.2%.
It earlier rose by as much as 4.85% to trade at a session high of USD2.365 per million British thermal units.
The June contract traded at USD2.320 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 April 27 rose by 28 billion cubic feet, compared to expectations for an increase of 31 billion cubic feet.
Inventories rose by 60 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 79 billion cubic feet, according to U.S. Energy Department data.
Total U.S. natural gas storage stood at 2.576 trillion cubic feet as of last week. Stocks were 840 billion cubic feet higher than last year at this time and 857 billion cubic feet above the five-year average of 1.719 trillion cubic feet for this time of year.
The report showed that in the East Region, stocks were 425 billion cubic feet above the five-year average, following a net injection of 20 billion cubic feet.
Stocks in the Producing Region were 325 billion cubic feet above the five-year average of 715 billion cubic feet, after a net withdrawal of 1 billion cubic feet.
Natural gas prices have surged nearly 18.5% since falling to a ten-year low of USD1.902 per million British thermal units on April 19.
Sentiment on the heating fuel has improved in recent session after hitting a string of fresh 10-year lows amid indications major North American natural gas producers were cutting back on production in response to lower prices.
Government data released earlier in the week showed that gross natural gas production in February fell 0.6% in the lower 48 states, the biggest decline in a year.
The report follows data from industry research group Baker Hughes saying that the number of active rigs drilling for natural gas in the U.S. fell by 18 last week to 613, the lowest since April 2002. The gas rig count is down by almost 35% since peaking at 936 in October.
However, the strong rally prompted Wall Street investment bank Goldman Sachs to say that it “believes that the rally in summer 2012 prices has gone too far.”
Natural gas futures were pressured all winter, tumbling to a string of fresh 10-year lows, as market sentiment was dominated by concerns over waning demand and elevated U.S. storage and production levels.
Concerns remain that U.S. gas supplies will reach total storage capacity by October.
If weekly stock builds through October match the five-year average, inventories would top out at 4.594 trillion cubic feet, 12% over peak capacity estimates of about 4.1 trillion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June tumbled 2% to trade at USD103.11 a barrel, while heating oil for June delivery dropped 1.25% to trade at USD3.104 per gallon.
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