Forexpros – Natural gas futures pared losses on Wednesday, bouncing off a four-day low as the previous session’s steep decline created bargain buying opportunities for investors ahead of Thursday’s closely-watched storage report.
On the New York Mercantile Exchange, natural gas futures for December delivery traded at USD3.775 per million British thermal units during U.S. morning trade, easing down 0.16%.
It earlier fell by as much as 1.21% to trade at USD3.731 per million British thermal units, the lowest price since October 27.
Natural gas futures plunged nearly 4% on Tuesday as prices were pressured by forecasts calling for mild weather across most parts of the U.S. through mid-November. Prices are off almost 6% since hitting a six-week high of USD3.961 on October 31.
The sharp decline triggered some bargain buying from traders reluctant to bet that prices would fall further with winter’s heating season fast approaching.
Meanwhile, markets were looking forward to the U.S. Energy Information Administration’s weekly report on U.S. natural gas stockpiles for the week ended October 28 on Thursday.
Early injection estimates range from 59 billion cubic feet to 87 billion cubic feet. The five-year average stockpile change for the week is an increase of 35 billion cubic feet, according to U.S. Energy Department data. Supplies climbed by 67 billion cubic feet in the same week a year earlier.
Over the past five weeks, more than 500 billion cubic feet of natural gas has been added to storage, bringing levels close to the multi-year highs reached last year.
U.S. inventories typically increase during the so-called “shoulder season”, the period in autumn after air-conditioning demand falls but before heating begins.
But this year’s increase, aided by unusually warm temperatures, offers a much larger cushion than in most years as winter approaches.
Meanwhile, industry weather group MDA Federal said Tuesday that temperatures along the U.S. East Coast were expected to be warmer-than-normal through mid-November, with the normal average temperature in New York estimated at 51 degrees Fahrenheit (10.5 Celsius).
Elsewhere on the Nymex, light sweet crude oil futures for delivery in December rose 0.92% to trade at USD93.03 a barrel, while heating oil for December delivery dipped 0.05% to trade at USD3.036 per gallon.
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