Natural gas futures surge 3% as weather turns warmer
On the New York Mercantile Exchange, natural gas for delivery in June rallied 8.7 cents, or 3.12%, to trade at $2.889 per million British thermal units during U.S. morning hours.
A day earlier, natural gas prices lost 7.8 cents, or 2.71%, to close at $2.802 after hitting a high of $2.935, the most since March19.
Futures were likely to find support at $2.725 per million British thermal units, the low from May 8, and resistance at $2.935, the high from May 11.
Updated weather forecasting models pointed to hotter-than-normal temperatures on the East Coast through May 26, boosting early summer cooling demand for the fuel. Forecasts originally called for mild summer weather during the period.
Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.
Approximately 49% of U.S. households use natural gas for heating, according to the Energy Department.
Meanwhile, the U.S. Energy Information Administration's next storage report slated for release on May 14 is expected to show a build of approximately 125 billion cubic feet for the week ending May 8.
Supplies rose by 101 billion cubic feet in the same week last year, while the five-year average change is an increase of 82 billion cubic feet.
The EIA said last week that natural gas storage in the U.S. rose by 76 billion cubic feet, compared to expectations for an increase of 75 billion and following a build of 81 billion cubic feet in the preceding week.
The five-year average gain for the period was an increase of 75 billion cubic feet, while supplies rose by 68 billion cubic feet during the comparable period a year earlier.
Total U.S. natural gas storage stood at 1.786 trillion cubic feet as of last week, 71.1% above year-ago levels and 3.6% below the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have made up for most of last winter’s unusually strong demand.
Elsewhere on the Nymex, crude oil for delivery in June tacked on 61 cents, or 1.03%, to trade at $59.86 a barrel, while heating oil for June delivery jumped 1.34% to trade at $1.971 per gallon.