Natural gas futures - weekly outlook: June 22 - 26

Investing.com - Natural gas futures closed higher for the first time in three days on Friday, as investors returned to the market to seek cheap valuations in wake of recent losses, which took prices to the lowest level in almost two weeks earlier in the session.

On the New York Mercantile Exchange, natural gas for delivery in August hit an intraday low of $2.761 per million British thermal units, the weakest level since June 9, before bouncing back to end at $2.840, up 4.1 cents, or 1.46%.

A day earlier, natural gas prices tumbled 8.4 cents, or 2.91%, to close at $2.799. For the week, the August natural gas contract rose 4.7 cents, or 2.4%, the second straight weekly gain.

Futures were likely to find support at $2.696, the low from June 9, and resistance at $2.977, the high from June 17.

Updated weather forecasting models pointed to warmer-than-average temperatures across most parts of the U.S. over the next two weeks, boosting expectations for increased summer cooling demand.

Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning. Natural gas accounts for about a quarter of U.S. electricity generation.

Meanwhile, the U.S. Energy Information Administration said in its weekly report on Thursday that natural gas storage in the U.S. rose by 89 billion cubic feet, compared to expectations for an increase of 93 billion and following a build of 111 billion cubic feet in the preceding week.

Supplies rose by 112 billion cubic feet in the same week last year, while the five-year average change is an increase of 87 billion cubic feet.

Total U.S. natural gas storage stood at 2.433 trillion cubic feet as of last week, 42.9% higher than during the same week a year earlier and 1.9% above 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 all of last winter’s unusually strong demand.

The EIA's next storage report slated for release on Thursday, June 25 is expected to show a build of approximately 80 billion cubic feet for the week ending June 19.

Supplies rose by 110 billion cubic feet in the same week last year, while the five-year average change is an increase of 86 billion cubic feet.

Elsewhere on the Nymex, crude oil for August delivery settled at $59.97 a barrel by close of trade on Friday, down 36 cents, or 0.71%, on the week, while heating oil for July delivery dropped 1.18% on the week to settle at $1.866 per gallon.