Forexpros – bsp;- Natural gas prices continued their move higher Wednesday, as a massive short covering rally sparked by Chesapeake Energy’s production cuts, continued for the third day.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.787 per million British thermal units during late U.S. trade, surging higher by 7.15%.
The gas traded at a high of 2.811 and hit a low of 2.602 during the trading session.
Earlier, Chesapeake Energy stated it will immediately cut 8% of production and said it will but its activity in regions that produce only gas in half by the second quarter.
The cutbacks in production are designed to reduce a supply glut in the United States caused by a warm winter season.
In bullish news Monday, The U.S. Energy department cut its estimate for natural gas reserves in the Marcellus shale formation by 66%, citing improved information on supply.
Despite the recent bullish run, prices remain about 45% lower than a year ago.
The U.S. National Oceanic and Atmospheric Administration stated last week that it expects the warmer than normal winter temperatures on the East Coast, Midwest and much of the Southwest to continue through mid February adding to the long term bearish sentiment, despite the recent rally.
Traders are looking forward to Thursday’s U.S. Energy Information Administration’s report on natural gas stockpiles for the week ended January 20.
The report is forecast to show that natural gas inventories in the U.S. fell by 91 billion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March advanced 0.92% to trade at USD99.86 a barrel.
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