Forexpros – Natural gas futures bounced higher during U.S. morning trade Friday, as the sharp, supply related sell off Thursday was greeted by bargain hunting speculators pushing prices higher on the session. .
On the New York Mercantile Exchange, natural gas futures for delivery in July traded at USD2.299 per million British thermal units during U.S. morning trade, bouncing 1.08%.
Bargain hunters moved into the market after the sharp Thursday sell off on warm weather fuel use bottom hopes.
Igniting the earlier sell off, the U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended June 1 rose by 62 billion cubic feet, above market expectations for an increase of 56 billion cubic feet.
Inventories rose by 81 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 99 billion cubic feet, according to U.S. Energy Department data.
Total U.S. natural gas storage stood at 2.877 trillion cubic feet as of last week. Stocks were 713 billion cubic feet higher than last year at this time and 687 billion cubic feet above the five-year average of 2.190 trillion cubic feet for this time of year.
The report showed that in the East Region, stocks were 347 billion cubic feet above the five-year average, following a net injection of 38 billion cubic feet.
Stocks in the Producing Region were 249 billion cubic feet above the five-year average of 842 billion cubic feet, after a net injection of 11 billion cubic feet.
Natural gas prices have been on the decline since touching a three-month high of USD2.820 on May 21. Technical traders attributed the downward movement to a shaky technical chart outlook, after the market failed to break above key resistance close to USD2.820 a number of times.
Despite the recent run of losses, natural gas prices are still up nearly 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 on the NYMEX, light sweet crude oil futures for delivery in July fell 2.16% to trade at USD82.98 a barrel.
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