Investing.com - U.S. natural gas prices erased early losses on Monday, rising to fresh three-month highs as last week’s bullish storage data and forecasts for warmer than average temperatures boosted the demand outlook.
Natural gas for delivery in June was up 0.78% to $3.040 per million British thermal units on the New York Mercantile Exchange, the most since February 23.
Last week natural gas prices rallied 4.72%, notching up a third straight week of gains.
The rally in gas prices was prompted by speculation that above-normal temperatures in the eastern half of the U.S. would bolster demand for the power plant fuel.
Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.
Power plants account for approximately 32% of gas demand, according to the Energy Department.
Gas prices were held in check by concerns that power companies could reduce consumption by switching to using more coal-fired power plants if prices rose above the $3 per million Btu level.
Elevated supply levels also weighed on the price outlook.
Last week’s storage report by the U.S. Energy Information Administration showed that supplies of natural gas rose by 111 billion cubic feet for the week ended May 8, less than expected but still close to record highs.
Total stocks now stand at 1,897 trillion cubic feet, up 752 billion cubic feet from a year ago and 38 billion cubic feet below the five-year average, the EIA said.
Elsewhere on the Nymex, crude oil for delivery in July eased 0.15%, to $60.44 a barrel, while heating oil for June delivery was down 0.99% to $1.9857 per gallon.