Forexpros – Natural gas futures came off the highest levels of the session during U.S. morning trade on Wednesday, easing off a four-week high as investors locked in profits ahead of Thursday’s closely-watched U.S. government report on natural gas supplies.

Prices rallied by as much as 4% earlier, as forecasts for warmer-than-normal weather across key parts of the U.S. in the coming days boosted demand expectations for the fuel.

On the New York Mercantile Exchange, natural gas futures for delivery in July traded at USD2.520 per million British thermal units during U.S. afternoon trade, giving back 0.98%.

It earlier rose by as much as 4.2% to trade at USD2.676 per million British thermal units.

Prices surged earlier after the Commodity Weather Group said it expected above-average temperatures across most states in the southern and central U.S. from June 25 through June 29.

According to weather service provider AccuWeather, the high in Dallas on June 25 was expected to be 101 degrees Fahrenheit (38 Celsius), 8 degrees higher than usual.

Meanwhile, industry weather group MDA Federal said that the U.S. Midwest and Northeast were expected to see their first period of summer heat this week.

Warmer-than-normal temperatures increase the need for gas-fired electricity to power air conditioning, boosting demand for natural gas. Natural gas accounts for about a quarter of U.S. electricity generation.

But prices came off their highs as market players shifted their focus to the U.S. Energy Information Administration’s closely-watched weekly report on natural gas inventories scheduled for Thursday.

Early injection estimates for the storage report range from 47 billion cubic feet to 72 billion cubic feet, compared to last year’s build of 90 billion cubic feet. The five-year average change for the week is an increase of 87 billion cubic feet.

The U.S. EIA said last week that natural gas storage in the U.S. rose by 67 billion cubic feet 2.944 trillion cubic feet last week, narrowing the surplus to 32% above last year’s level and 29% above the five-year average level for that week.

The smaller-than-expected increase indicated that demand for the fuel is better-than-expected and suggested that demand for natural gas among power utilities remains strong.

The weekly gas report has been “bullish” in nine of the past 10 weeks, raising expectations that record-high storage can be trimmed to more manageable levels in the 22 weeks left before winter withdrawals begin.

Natural gas prices soared 14% in the wake of last week’s bullish report, the largest one-day gain in more than two years.

The start of the Atlantic hurricane season has been providing additional support to the market in recent sessions as well.

The U.S. National Hurricane Center was monitoring a low-pressure system over the northwestern Caribbean Sea with a 10% chance of further development over the next 48 hours.

The Atlantic hurricane season runs from June 1 through Nov. 30. Energy traders track tropical weather in the event it disrupts production in the Gulf of Mexico.

Natural gas prices are up 26% since touching a decade-low of USD1.902 on April 19.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in August fell 3.72% to trade at USD81.19 a barrel.