Investing.com - U.S. natural gas futures rose sharply on Tuesday, as forecasts for late this week and early next week turned cooler, boosting near-term demand expectations for the heating fuel.
A weather system with heavy showers and thunderstorms is tracking through the central U.S. with slightly cool conditions expected to last through May 16. Another weather system is grazing New England also with cooling. Forecasts originally called for mild weather during the period.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on spring heating demand.
Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.
Natural gas for delivery in June on the New York Mercantile Exchange rose 4.4 cents, or 2.1%, to trade at $2.142 per million British thermal units by 14:30GMT, or 10:30AM ET, after rising by as much as 3.5% to a daily peak of $2.173.
A day earlier, gas futures dipped 0.3 cents, or 0.14%, as forecasts calling for less cold weather over the next two weeks weighed.
Unless intense summer heat boosts demand from power plants, natural gas in storage will test physical storage limits of 4.3 trillion cubic feet at the end of October.
Total U.S. natural gas storage stood at 2.625 trillion cubic feet as of last week, according to the U.S. Energy Information Administration, 32.8% higher than levels at this time a year ago and 31.9% above the five-year average for this time of year.
The EIA's next storage report slated for release on Thursday is expected to show a build of approximately 60 billion cubic feet for the week ending May 6.
That compares with a gain of 68 billion cubic feet in the prior week and a five-year average increase of around 79 billion for this time of year.
Natural gas futures are up almost 20% since hitting a 20-year low of $1.611 in early March. Despite recent gains, prices are still down nearly 6% so far this year as weak winter heating demand, near-record production and record-high storage levels dragged down prices.
Elsewhere on the Nymex, crude oil for delivery in June tacked on 51 cents, or 1.17%, to trade at $43.95 a barrel, while heating oil for June delivery jumped 2.41% to trade at $1.317 per gallon.