Forexpros – Natural gas futures found support Friday, on bottom fishing buying, despite an earlier report from the U.S. Energy Information Administration indicating that natural gas inventories declined less-than-expected last week, underlining concerns over elevated storage levels.
On the New York Mercantile Exchange, natural gas futures for delivery in April traded at USD2.49 per million British thermal units during U.S. morning trade, adding 0.63%.
On Thursday, price tumbled by as much as 6.2% to trade at USD2.454 per million British thermal units, the lowest since February 16.
The April contract traded at USD2.525 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 February 24 fell by 82 billion cubic feet, after declining by 166 billion cubic feet in the preceding week.
Analysts had expected U.S. natural gas storage to drop by 90 billion cubic feet.
Inventories fell by 85 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 118 billion cubic feet, according to U.S. Energy Department data.
Total U.S. natural gas storage stood at 2.513 trillion cubic feet as of last week. Stocks were 756 billion cubic feet higher than last year at this time and 780 billion cubic feet above the five-year average of 1.733 trillion cubic feet for this time of year.
The report showed that in the East Region, stocks were 326 billion cubic feet above the five-year average, following a withdrawal of 58 billion cubic feet.
Stocks in the Producing Region were 344 billion cubic feet above the five-year average of 630 billion cubic feet, after a net withdrawal of 19 billion cubic feet.
Prices were under pressure before the supply data, as weather forecasts continued to point to mild weather across the U.S. throughout most of March.
The Commodity Weather Group said earlier in the week that the U.S. Northeast and Ohio Valley-states were expected to become much warmer-than-normal by the second week of March, dampening demand for the heating fuel.
The above-average weather outlook comes after the CWG said last week that March was forecast to be 13.5% warmer than March of last year.
It’s important to note that April is considered a transition month for natural gas. Futures contracts tend to trade more lightly during spring months because demand for heating is weak and natural gas-fueled power plants have yet to step up production to serve air conditioners.
Natural gas prices have lost almost 13.5% in the past six sessions leading up to Thursday, as traders focused on mild weather and bloated inventories.
Milder-than-usual temperatures have weighed on natural gas prices all winter, sending prices to 10-year lows.
Winter so far in the U.S. has been the second mildest since 1950. It is running about 13% warmer than the 30-year normal, according to recent data from MDA EarthSat.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in April gave back 1.19% to trade at USD107.55 a barrel, after the Saudi pipeline explosion rumor was revealed as a possible Iranian hoax.
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