US Natural Gas Futures Jump


US natural gas futures jumped on Thursday to match a six-week high after a government report showed a smaller-than-expected increase in gas added to storage, bolstering concern that refilling the nation’s extremely low inventory before next winter will be difficult. Front-month natural gas futures on the New York Mercantile Exchange jumped 21.1 cents, or 4.65 percent, to settle at $4.741 per million British thermal units.

The contract ended the week up 2.6 percent after touching a high of $4.746, the highest since early March. NYMEX trading will be closed Friday in observance of Good Friday and will resume Sunday at 1800 EDT (2200 GMT). After spending the past three weeks trading between $4.30 and $4.60 per mmBtu, the May contract sprang to life Thursday after the US Energy Information Administration reported that gas in storage rose last week by 24 billion cubic feet, below analysts’ expectations of a 34-bcf injection.

“We got surprised by the storage report,” said Steve Mosley of The SMC Report. “It was about the same as last year with the same weather week. That doesn’t indicate we have any loosening in supply and demand over last year.” The 24-bcf injection matches the year-ago injection of 25 bcf but fell below the five-year average gas build of 37 bcf. Gas in storage is now 850 bcf, holding at the lowest level for this time of year since 2003.

Last week’s 4-bcf injection was also below analysts’ expectations. “Nobody wants to be short if we think we are going to have trouble making up that year-on-year storage deficit,” Mosley said. Record gas production has not translated into higher storage, said analyst Gene McGillian of Tradition Energy in Stamford, Connecticut. “We have very depleted stockpiles after this winter, and the storage builds have been less than expected for the last two weeks, which is reinforcing fears about how much gas we can put back in storage ahead of next winter,”

“I wouldn’t be surprised if we had another small build next week after this week’s cold weather,” McGillian said. Looking ahead, average temperatures across the United States are expected to remain mild, in the high 50s Fahrenheit to 70s F (10-21 degrees Celsius), through the end of next week, according to forecasters at MDA Weather Services in Gaithersburg, Maryland.

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