NEW YORK: US natural gas futures ended higher on Thursday for a second straight day, backed by technical buying and short covering after recent losses despite moderate weather forecasts for the eastern half of the nation that should tamp down demand.
The front contract has gained 2.4 percent in the last two sessions but is still down slightly so far this week.
Prices have been struggling for the last two weeks. Most technical traders agreed the market was oversold and due for a bounce, particularly with downside momentum stalling several times this week in the low-$3.70s.
"I think the gains over the last two days have been mostly technical, a little oversold action, but there could be a little selling pressure ahead based on weather," said Richard Hastings, macro strategist at Global Hunter Securities in North Carolina.
Front-month gas futures on the New York Mercantile Exchange ended up 3.7 cents at $3.814 per million British thermal units after trading between $3.715 and $3.85. The front briefly dipped to a three-month low of $3.71 on Wednesday.
Many traders remain skeptical of the upside without a broader-based heatwave to stir more demand, noting supplies were comfortable and moderate temperatures this month were likely to lead to more big inventory builds.
Commodity Weather Group still expects temperatures for most of the eastern half of the nation to remain near seasonal for the next two weeks. Temperatures in Texas and parts of the South were likely to be above normal, but no major heat was expected.
Traders noted that gas prices see-sawed after the US Energy Information Administration reported that total domestic gas inventories rose last week by 95 billion cubic feet to 2.347 trillion cubic feet.
Many traders viewed the build as neutral for prices, noting it was in line with the Reuters poll estimate of 96 bcf. But some saw it as bearish, coming in well above the five-year average increase for that week of 84 bcf.
The weekly build trimmed the deficit relative to last year by 29 bcf to 587 bcf, or 20 percent below last year's record highs at that time. It also cut the shortfall versus the five-year average to just 58 bcf, or 2 percent.
Early injection estimates for next week's report range from 83 bcf to 101 bcf, versus a 63-bcf build during the same week last year and a five-year average rise for that week of 80 bcf.
Traders were waiting for the next Baker Hughes drilling rig report on Friday. Last week's data showed the gas rig count was still hovering just above an 18-year low.
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