Natural gas futures hit 2-month high as US inventories rise less than expected

Natural gas jumped by more than 4.5% on Thursday to the highest level in almost two months after government data showed US natural gas inventories rose less than expected in the week ended April 11th. Weather forecasts calling for no significant warm up across most of the US through the end of April also kept the market underpinned.

On the New York Mercantile Exchange, natural gas futures for settlement in May rose by 4.66% on Thursday to close at $4.741 per million British thermal units. Prices surged to an intraday high of $4.746 per mBtu, the highest level in almost two months. The energy source fell by 0.8% on Wednesday but Thursdays advance offset previous weekly losses, marking a 2.7% weekly advance. Prices jumped nearly 4.6% during the previous five-day period.

Gas rallied on Thursday after swinging between gains and losses earlier in the day as a bullish EIA storage report signified better-than-expected demand. The government agency reported that US natural gas inventories rose by 24 billion cubic feet in the seven days through April 11th, compared to analysts forecasts for a 34-bcf jump. Total gas held in US underground storage hubs amounted to 850 billion cubic feet, 50% below last years 1 700-bcf supplies level during the comparable week. The deficit to the five-year average storage narrowed to 54.3% from 54.7% in the previous week, retreating from an 11-year low.

Supplies in the East Region saw a net injection of 6 billion cubic feet to 311 bcf and were 59.7% below the five-year average amount. Inventories in the West Region jumped by 8 billion cubic feet to 168 bcf, 44.0% beneath the average, while stockpiles in the Producing Region rose by 10 bcf to 371 bcf, marking a 53% deficit to the five-year average storage.

Forecasts for active weather and no significant warm up to come in the next two-to-three weeks also helped push prices up. NatGasWeather.com reported that temperatures across most of the eastern and central US will rebound in the next few days, with an exception being the north-central US. However, parts of the far Northeast will not see a significant warm up as cool northerly flow persists and keeps some need for heating demand, NatGasWeather said.

Apart from readings moderating in the next several days, temperatures are not expected to see a significant rise for at least the next couple of days as the active weather will bring more cool blasts. This should induce natural gas demand and keep the replenishment of US inventories limited, marking only modest build ups.

According to AccuWeather.com, temperatures in New York on April 23rd will bottom at 42 degrees Fahrenheit, 5 below usual. The low in Chicago will be around 44 degrees Fahrenheit, matching the average, while the high will be at 55 degrees, 7 below the average. Readings in Boston will drop to 41 degrees, 2 beneath normal, while peaking at 57 degrees Fahrenheit, 1 degree below usual.