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Natural gas prices fall on profit taking, arrival of spring

Published 03/07/2014, 02:29 PM
Updated 03/07/2014, 02:29 PM

Investing.com - Natural gas futures dropped on Friday after investors locked in gains from Thursday's bullish supply report and sold the commodity for profits fueled by concerns that the arrival of spring  in the U.S. will bring warmer temperatures that will cut into demand for heating.

On the New York Mercantile Exchange, natural gas futures for delivery in April traded at $4.585 per million British thermal units during U.S. trading, down 1.66%. The commodity hit session high of $4.681 and a low of $4.567.

The April contract settled up 3.07% on Thursday to end at $4.662 per million British thermal units.

Natural gas futures were likely to find support at $4.463 per million British thermal units, Monday's low, and resistance at $4.721, Wednesday's high.

The U.S. Energy Information Administration said in its weekly report on Thursday that natural gas storage in the U.S. in the week ended Feb. 28 fell by 152 billion cubic feet, far outpacing expectations for a decline of 138 billion cubic feet.

Supplies fell by 149 billion cubic feet in the same week a year earlier, while the five-year average is a decline of 105 billion.

Total U.S. natural gas storage stood at 1.1968 trillion cubic feet, the lowest for this time of year since 2004.

Stocks were 908 billion cubic feet less than last year at this time and 758 billion cubic feet below the five-year average of 1.954 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 370 billion cubic feet below the five-year average, following net withdrawals of 82 billion cubic feet.

Stocks in the Producing Region were 273 billion cubic feet below the five-year average of 754 billion cubic feet after a net withdrawal of 43 billion cubic feet.

The data sent prices rising to levels ripe for profit taking on Friday.

Concerns that the coldest part of winter has passed, while warmer spring temperatures lie just around the corner also fueled the selloff.

Spring and fall see the weakest demand for natural gas in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.

The heating season from November through March is the peak demand period for U.S. gas consumption. Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in April were up 1.03% and trading at $102.61 a barrel, while heating oil for April delivery were up 0.98% and trading at $3.0124 per gallon.

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