Forexpros – Natural gas futures were lower during U.S. morning trade on Wednesday, as traders were wary of pushing prices higher ahead of Thursday’s closely-watched U.S. government report on natural gas supplies.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.672 per million British thermal units during U.S. morning trade, shedding 0.4%.
The June contract is due to expire at the end of trading on May 29.
Meanwhile, the more actively traded contract for July delivery dropped 1.33% to trade at USD2.739 per million British thermal units. The July contract fell by as much as 2.5% earlier to trade at a session low of USD2.684.
Natural gas prices surged nearly 4% in the previous session, as extended forecasts showing warm weather across most parts of the U.S. into early June provided support.
Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.
But the strong gain prompted investors to cash out of the market to lock in gains ahead of Thursday’s supply data.
Market participants were looking forward to the U.S. Energy Information Administration’s closely-watched weekly report on natural gas inventories scheduled for Thursday.
Early injection estimates range from 70 billion cubic feet to 97 billion cubic feet, compared to last year’s build of 101 billion cubic feet. The five-year average change for the week is an increase of 97 billion cubic feet.
The U.S. EIA said last week that natural gas storage in the U.S. rose by 61 billion cubic feet 2.667 trillion cubic feet last week, a record high for this time of year and 40.8% higher than the five-year average.
Weekly supply data has been mostly “bullish” in five of the last six weeks, but market participants noted that below average supply injections will be needed to trim record supplies to more manageable levels in the 26 weeks or so left before winter withdrawals begin.
Sentiment on the fuel has improved in recent weeks. Prices are up more than 30% since hitting 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 0.85% to trade at USD91.08 a barrel, while heating oil for June delivery shed 0.85% to trade at USD2.836 per gallon.
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