Natural gas futures rebound after hitting 2-year low

Investing.com - U.S. natural gas prices rebounded on Tuesday, as investors returned to the market to seek cheap valuations in wake of recent losses which took prices to the lowest level in more than two years.

On the New York Mercantile Exchange, natural gas for delivery in February rallied 7.9 cents, or 2.83%, to trade at $2.874 per million British thermal units during U.S. morning hours.

A day earlier, natural gas hit $2.783, a level not seen since September 2012, before settling at $2.795, down 15.1 cents, or 5.13%, as forecasts showed a return to milder weather in the second half of January.

Futures were likely to find support at $2.783 per million British thermal units, the low from January 12, and resistance at $2.990, the high from January 9.

Natural gas prices are down nearly 38% since mid-November as soaring domestic production has been met with weak demand amid an unusually mild start to winter thus far this season.

Gains were likely to remain limited as updated weather forecast models showed mild temperatures were expected for most of the nation from January 16 through January 20.

The heating season from November through March is the peak demand period for U.S. gas consumption.

Meanwhile, the U.S. Energy Information Administration's next storage report is slated for release on Thursday, January 15, with analysts expecting a decline of 192 billion cubic feet for the week ending January 9.

Inventories fell by 268 billion cubic feet in the same week a year earlier, while the five-year average change is a drop of 190 billion cubic feet. Natural gas storage in the U.S. fell by 131 billion cubic feet last week.

Total U.S. natural gas storage stood at 3.089 trillion cubic feet, 7.4% above year-ago levels and 2.1% below the five-year average for this time of year.

Elsewhere on the Nymex, crude oil for delivery in February sank $1.34, or 2.92%, to trade at $44.73 a barrel, while heating oil for February delivery slumped 2.42% to trade at $1.614 per gallon.