Forexpros – Natural gas futures moved lower during U.S. afternoon trade Tuesday, as investors cashed out of the market to lock in gains from Monday’s 4% rally that took prices to a one-week high.
On the New York Mercantile Exchange, natural gas futures for June settlement traded at USD2.066 per million British thermal units during U.S. afternoon trade, plunging 1.43%.
Natural gas prices surged by 4.2% on Monday, boosted by some technical buying and after a late-season storm brought heavy rain and even snow to certain areas of the East Coast over the weekend.
The harsh weather was expected to persist, with the National Weather Service calling for heavy snow through Tuesday in western New York, west-central Pennsylvania and northeast West Virginia.
Bullish speculators are betting on the wintery weather potentially leading to some late-season demand for the heating fuel.
The April storm comes on the heels of one of the mildest U.S. winters on record, which battered natural gas prices all winter.
The National Oceanic and Atmospheric Administration recently said that this past March was the warmest ever in U.S. history.
Despite the upward move in prices, few market participants expect the rally to continue, with most analysts expecting futures to fall to USD1.850 in the short-term. Prices fell to USD1.902 per million British thermal units last Friday, the lowest since September 26, 2001.
Natural gas futures have been hitting a string of fresh 10-year lows below the key USD2.00-level over the past two weeks, as market sentiment has been dominated by ongoing concerns over waning demand and elevated U.S. storage and production levels.
Natural gas prices have plunged almost 25% since the beginning of March and are down nearly 35% since the start of 2012.
Weekly storage data from the U.S. released last week showed that natural gas storage in the U.S. rose by 25 billion cubic feet last week, the fifth consecutive seasonal injection of natural gas for the year.
Total U.S. natural gas storage stood at 2.512 trillion cubic feet as of last week, a record high for this time of year and almost 58% higher than the five-year average for this time of year.
Early injection estimates for Thursday’s storage data range from 35 billion cubic feet to 75 billion cubic feet, compared to last year’s build of 35 billion cubic feet. The five-year average change for the week is an increase of 47 billion cubic feet.
Current inventories are at levels they didn’t reach last year until the end of June. Concerns are growing over whether enough capacity exists to store the fuel.
If weekly stock builds through October match the five-year average, inventories would top out at 4.594 trillion cubic feet, 12% over peak capacity estimates of about 4.1 trillion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June rose 0.34% to trade at USD103.46 a barrel.
&nb
Forexpros
