NEW YORK: US natural gas futures ended up sharply on Monday after losing ground last week, underpinned by expectations for another light weekly inventory build on Thursday and cooler late-week weather forecasts for the Midwest that should stir more heating demand.
Cold late-winter weather, a chilly spring and above-average nuclear plant outages put a huge dent in record gas inventories and helped drive up gas price expectations for this year.
"The June contract is moving higher today in response to colder updates to the weather forecasts. Traders are now pricing in the possibility of a very limited (spring) shoulder season," Gelber & Associates analyst Aaron Calder said in a report.
Gas prices, pressured last week by technical selling after nine straight weekly gains, slid nearly 6 percent as new longs in the market opted to take profit ahead of milder weather expected in May that should slow space heating needs.
Traders also noted that gas prices over $4 were likely to curb demand by prompting more utilities to use coal rather than gas for power generation and increase supply by encouraging producers to turn on more wells.
Front-month gas futures on the New York Mercantile Exchange ended up 16.9 cents, or 4 percent, at $4.392 per million British thermal units after trading between $4.225 and $4.395.
The front contract, which hit a 21-month high of $4.429 on April 18, last week posted its first weekly decline in 10 weeks.
The slide broke trendline and moving average support, but most chart traders were not ready to call an end to the bull market, which began in mid-February and had driven futures up some 40 percent. Most were waiting to see if the new front contract can hold above $4 when milder spring weather arrives.
While Commodity Weather Group expects the Midwest and South to cool again later this week, the forecaster said the East Coast should continue to see low demand, with no significant warming or cooling loads expected for the next two weeks.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
Comments
Comments are closed.