We have updated our privacy policy and terms & conditions. Find out more here.

Natural gas bounces on bargain hunting buying

CommoditiesMay 08, 2012 06:26PM GMT Add a Comment
Share with a Friend
Thanks for sharing
Emails have been sent to:
To send more emails click here
Investing.com - Natural gas futures bounced higher during U.S. afternoon trade Tuesday, as bargain hunters purchased the heating fuel despite concerns over elevated U.S. storage levels  amid indications major North American natural gas producers were cutting back on production.

On the New York Mercantile Exchange, natural gas futures for delivery in June traded at USD2.373 per million British thermal units during U.S. afternoon trade, gaining 1.71%.       

It earlier fell by as much as 1.8% to trade at a session low of USD2.287 per million British thermal units. 

Sentiment on the heating fuel has improved in recent weeks after hitting a string of fresh 10-year lows. Prices are up almost 21% since hitting a decade-low of USD1.902 on April 19, amid indications major North American natural gas producers were cutting back on production in response to lower prices. 

Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas provided further support over recent sessions. U.S. power companies used 34% more gas in February than a year earlier, Energy Department data showed.

However, prices remain vulnerable to a downside correction in the near-term as traders remain concerned over elevated U.S. storage levels.

The U.S. Energy Information Administration said last week that natural gas storage in the U.S. rose by 28 billion cubic feet to 2.756 trillion cubic feet, up 48% from year ago levels and 50% higher than the five-year average.

Current inventories are at levels they did not reach until July of last year.

If weekly stock builds through October match the five-year average, inventories would top out at 4.532 trillion cubic feet, 9% over peak capacity estimates of about 4.1 trillion cubic feet.    

Early injection estimates for this week’s storage data range from 25 billion cubic feet to 65 billion cubic feet, compared to last year's build of 71 billion cubic feet. The five-year average change for the week is an increase of 84 billion cubic feet.

Meanwhile, technical traders noted that upward price movement seemed stalled, with the market unable to break above the six-week high of USD2.385 hit early last week despite several attempts.    

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in June tumbled 1.33% to trade at USD96.64 a barrel. 

Natural gas bounces on bargain hunting buying

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?

Successfully Reported

Thank you. This comment has been flagged for a moderator.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data .

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.