Natural gas futures rebounded to a positive territory on Thursday, after a three-day rally that was interrupted in the previous session. The trading market was in deep thought about the direction that it should take following a larger weekly storage build.
The most active May gas contract on the New York Mercantile Exchange‘s Henry Hub rose by 1.2%, settling at $2.249 per million metric British thermal units (mmBtu) or million metric British thermal units. It spent most of the day in the red, with a session low of $2.143, before bouncing back in late trade.
Previously, in Wednesday’s session, May gas dipped by 6% after a 16% rise in the previous three days. This drop was because of the weather forecasters’ expectations for wintry-like conditions through early May, which they later dismissed citing warmer conditions.
The United States Energy Information Administration (EIA) reported that utilities in the country added 69 billion cubic feet of gas into storage in the latest week to April 14. This was after burning a much lesser anticipated volume of fuel for heating due to mild weather. According to Houston-based energy markets advisory Gelber & Associates, this storage injection is on the higher end for this time of year and is attributed to the recent gains in production and renewable generation over the past week.
Industry analysts, tracked by Investing.com, expected a build of 69 bcf on average for last week, versus the 25-bcf injection for the week ended April 7. The latest build also compared with the 47-bcf injection during the same week a year ago and a five-year (2018-2022) average increase of 41 bcf.
The EIA reported that inventories in U.S. gas storage are now at a total of 1.930 trillion cubic feet (tcf), which is 34% higher than the year-ago storage level of 1.442 tcf and almost 21% higher than the five-year average of 1.601 tcf for gas inventories.
Chart-wise, the front-month May gas contract on the Henry Hub could stay above $2 so long as it held above major support at $2.04, says Sunil Kumar Dixit, chief technical strategist at SKCharting.com. On Thursday’s trade, May gas went down to $2.14 before rebounding off that session low.
For ‘natty’ (as the all-season fuel for heating and cooling is known), the debate on when the bearish tide would irrevocably turn has raged since gas prices began their headlong fall from 14-year highs of $10 per mmBtu in August. At brief intervals this year, the market had appeared to be on the cusp of a serious rebound—like in late February when it got above $3 after breaking below $2 earlier that month for the first time since September 2020.
Natural gas futures are on the rise despite the bigger than anticipated storage build. The debate on when the bearish tide would irrevocably turn has raged since gas prices began their headlong fall from 14-year highs of $10 per mmBtu in August. At brief intervals this year, the market had appeared to be on the cusp of a serious rebound, exciting traders and analysts over the prospect of $3 pricing and beyond.