Natural gas traded on the upside for the first time in six days as market players were lured back to the market to seek cheap valuations. Gains remained limited as weather forecasters kept on pointing at mild temperatures across key consuming areas.
On the New York Mercantile Exchange, natural gas for September delivery traded at $3.433 per million British thermal units at 14:13 GMT, up 0.01% on the day. The fuel traded higher throughout the day and hit days high at $3.472 during European trading, while days low was touched at $3.427 in the early U.S. session, the lowest since February 24. The fuel slipped 0.26% on Tuesday, a fifth consecutive day of declines, and is so far marking a 4% weekly decline after shedding 5.2% the previous week.
However, natural gas gains remained curbed as weather forecasters continued to predict cooler than normal temperatures across most of the U.S. Northeast and Midwest over the next six to ten days. When above-normal temperatures are expected, natural gas surges as increased electricity demand to power air-conditioning calls for more supply of the fuel, which is used for a quarter of the U.S. electricity generation. Mild temperatures have the opposite effect.
Investors will also be keeping in focus the Energy Information Administrations weekly U.S. natural gas stockpiles report. Early injection estimates for this weeks data range between 47 billion cubic feet to 63 billion, which is above last years 28 billion cubic feet build up during the comparable week. The five-year average reading stands at 47 billion cubic feet.
Last week, the EIA said that U.S. natural gas stockpiles rose by 41 million cubic feet in the week ending July 19 and totaled 2 786 billion. The Natural Gas Storage Indicator was 12.5% lower than the same 7-day period last year, which equaled 3 185 billion cubic feet. Last week’s inventories were also 1.6% below the five-year average, which stand at 2 832 billion cubic feet. However, last week’s build was well above the preceding year’s 26 billion cubic feet increase during the comparable week, but below the five-year average gain of 53 billion.
The EIA reported that after a 25 billion cubic feet injection, stocks in the East Region were 120 billion below the five-year average. Meanwhile, stocks in the Producing Region were 45 billion cubic feet above the five-year average of 980 billion after an injection of 12 billion cubic feet.
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