Natural gas at 2-month high as storage injection underwhelms; Up 14% on week
2023.05.18 18:39
© Reuters.
Investing.com — Is the natural gas bull back? Seems so, at least based on what the market’s been doing the past two weeks.
Since surviving a drop to $2 lows on April 28 that resulted in a 11% drop that week, gas futures have gone from strength to strength, gaining 6% the following week and 15% for the current one.
In the latest trading session on Thursday, the hub’s contract settled at $2.5920 per metric million British thermal units, up 22.7 cents, or 10%, on the day. More importantly, the benchmark gas contract hit a two-month high of $2.63 — just clearing the mid-$2 level which has been its ceiling since March.
The gas rally has come on the back of what some sensed as improving fundamentals in America’s favorite fuel for indoor temperature control, despite a supply glut.
U.S. rose by 99 billion cubic feet, or bcf, last week, the Energy Information Administration, or EIA, said Thursday, announcing a smaller-than-expected build that bolstered sentiment in a market that needs to see less stockpile increases and more demand.
The build in gas inventories for the week ended May 12 compares with the 78-bcf increase from the previous week.
“The market expected a 108-109 bcf injection, and immediately following the release prompt price rallied,” noted Gelber & Associates, a Houston-based advisory for energy markets.
“Should the market break above the 50-day moving average, this would be an indication of bullish sentiment that has the potential to propel prices toward the $3.00/mmBtu level, a level that has seen significant resistance.”
Notwithstanding the smaller-than-expected build for last week, the latest inventory rise put total gas in underground caverns in the United States at 2.24 trillion cubic feet, or tcf. That was 30.3% higher from the year-ago level and 17.9% above the five-year average of 1.9 tcf.
