Natural gas futures rally more than 2% in early trade

Investing.com - U.S. natural gas prices rose for the first time in three sessions on Monday, as investors returned to the market to seek cheap valuations in wake of recent losses.

On the New York Mercantile Exchange, natural gas for delivery in July jumped 5.6 cents, or 2.05%, to trade at $2.806 per million British thermal units during U.S. morning hours.

On Friday, natural gas prices slumped 7.5 cents, or 2.65%, to end at $2.750. Futures were likely to find support at $2.744 per million British thermal units, the low from June 12, and resistance at $2.919, the high from June 11.

Updated weather forecasting models pointed to warmer-than-average temperatures in the eastern third of the U.S. through June 24, boosting near-term demand expectations for the heating fuel.

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 said last week that natural gas storage in the U.S. rose by 111 billion cubic feet, broadly in line with expectations for an increase of 112 billion and following a build of 132 billion cubic feet in the preceding week.

Supplies rose by 109 billion cubic feet in the same week last year, while the five-year average change is an increase of 89 billion cubic feet.

Total U.S. natural gas storage stood at 2.344 trillion cubic feet as of last week, 47.3% 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 18 is expected to show a build of approximately 98 billion cubic feet for the week ending June 12.

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.

Elsewhere on the Nymex, crude oil for delivery in August shed 82 cents, or 1.37%, to trade at $59.58 a barrel, while heating oil for July delivery dipped 1.32% to trade at $1.864 per gallon.