Forexpros – Natural gas futures were sharply lower in early U.S. trade on Wednesday, as investors sold the heating fuel to lock in profits, following a rally which drove prices to a six-week high on Tuesday.
On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.325 per million British thermal units during U.S. morning trade, falling 1.96%.
Natural gas had rallied more that 16% in the previous three sessions boosted by speculation that lower prices would lead to production cuts.
The rally gained momentum picked after a U.S. Energy Information Administration report on Monday showed that gross gas production fell 0.6% in February, easing off January’s record high, indicating that a decline in gas drilling this year was cooling record high output.
But sentiment on the heating fuel remained fragile amid ongoing concerns over inventory and production levels which are close to record highs.
Last week’s storage data from the U.S. EIA showed that natural gas storage rose by 47 billion cubic feet to 2.548 trillion, more than 52% above last year’s level and almost 56% higher than the five-year average for this time of year.
Meanwhile, concerns remained that production cuts have not significantly slowed pipeline flows, which are still hovering near record levels.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June was down 0.56% to trade at USD105.56 a barrel, while heating oil for June delivery lost 0.33% to trade at USD3.167 per gallon.
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