MarketUpdate 3/25/2013

Natural gas futures were little changed during early U.S. morning hours on Monday, with prices hovering below last week’s 18-month high, as market players were hesitant to extend a recent rally amid bearish chart signals.

On the New York Mercantile Exchange, natural gas futures for delivery in May traded at USD3.959 per million British thermal units during U.S. morning trade, up 0.2% on the day.       

Prices held in tight trading range between USD3.955 per million British thermal units, the session low and a daily high of USD3.978 per million British thermal units.

Nymex gas prices rose to USD4.021 per million British thermal units on March 21, the strongest level since September 15, 2011, before turning lower as a bout of technical selling set in after prices were met with strong resistance above the USD4.00-level.

Natural gas prices have risen sharply in recent weeks. The heating fuel is up almost 21% since falling close to a four-month low of USD3.125 per million British thermal units on February 15, boosted by calls for colder temperatures in major consuming regions across the U.S.

Natural gas prices have closely tracked shifting weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts on late-winter heating demand.

Updated weather forecasts continued to call for below-normal readings for most of the Eastern half of the U.S. in the next six-to-ten days.

Bullish speculators are betting on the cool weather increasing late-winter demand for the heating fuel.

The heating season from November through March is the peak demand period for U.S. gas consumption. Nearly 50% of all U.S. households use gas for heating.

Easing concerns over bloated U.S. inventory levels also supported prices. The U.S. Energy Information Administration said last week that natural gas storage in the U.S. fell by 62 billion cubic feet.

Inventory withdrawals were flat in the same week a year earlier, while the five-year average change for the week is a decline of 26 billion cubic feet.

Total U.S. natural gas storage stood at 1.876 trillion cubic feet as of last week, 21.5% below their level this time last year, but still 9.5% above the five-year average.

Early withdrawal estimates for this week’s storage data range from 59 billion cubic feet to 94 billion cubic feet.

Inventories rose by 45 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a buildup of 6 billion cubic feet.

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