NEW YORK: US natural gas futures ended higher on Thursday for a second straight day, reversing course as technical buying pulled prices out of an early slide that drove the front contract to a five-week low after data showed swelling inventories.
The US Energy Information Administration reported that total domestic gas inventories rose last week by 88 billion cubic feet to 1.865 trillion cubic feet.
The weekly build was above the Reuters poll estimate of 83 bcf and well above the five-year average increase for that week of 69 bcf.
"The data suggests that even with colder than normal temperatures over a large portion of the Midwest, there was only minimal gas-related heating demand as demonstrated by the large injection compared to last year and the five year average," Energy Management Institute's Dominick Chirichella said.
Chirichella also noted that with forecasts becoming more seasonable, the call on gas for heating or cooling will be minimal for the next few weeks.
Front-month gas futures on the New York Mercantile Exchange ended up 0.5 cent at $3.983 per million British thermal units after sliding to a five-week low of $3.883 right after the EIA report.
The front contract lost 2.7 percent last week, its second straight weekly decline after nine consecutive weeks of gains. It is still down 1.4 percent so far this week.
Moderating temperatures have been making previously bullish traders nervous. The milder weather follows a cold winter and chilly spring that whittled down record high storage and drove gas prices up more than 40 percent from mid-February lows, peaking at a 21-month high of $4.444 last week.
While chart traders said the market was oversold and due for a bounce after sliding 9 percent in the last three weeks, they said the upside was likely to be limited as milder temperatures lead to more above-average weekly storage builds.
There are still below-normal temperatures in the forecast, particularly for Texas and the Southeast, but traders noted below-seasonal readings at this time of year were not expected to trigger much heating or cooling load.
Commodity Weather Group expects seasonal temperatures in the Midwest, East and South during the 11- to 15-day time frame.
Some traders expect gas prices to remain under pressure at least until hotter weather arrives and forces homeowners and businesses to crank up air conditioners.
ANOTHER BIG INVENTORY BUILD
This week's storage build was the fourth injection of the stock building season. It exceeded market expectations for the second straight week and pressured prices early.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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