Market

The timing of the season’s first significant summer cooling demand remained an open question Wednesday, but that didn’t stop natural gas futures from rallying sharply, helped by a reported drop in production. In the spot market, a stormy spring pattern didn’t stir much interest for buyers, and the NGI Spot Gas National Avg. added 0.5 cents to $2.210/MMBtu.

Undeterred by the prospect of a hefty injection from this week’s government storage report, natural gas futures traders bid up prices Wednesday with support from seasonal and technical factors. In the spot market, cooler temperatures to the north and warmer conditions to the south helped drive modest but widespread gains; the NGI Spot Gas National Avg. rose 6.5 cents to $2.210/MMBtu.

Weather models continued to add back some demand for the next couple of weeks, driving natural gas futures marginally higher Wednesday as the market begins to move beyond a month-long period of massive year/year weather differences that were seen pushing storage inventories to a surplus over last year’s levels. The May Nymex gas futures contract settled seven-tenths of a cent higher at $2.462/MMBtu, while June rose 0.1 cents to $2.50.

Natural gas bears were emboldened after taking out a long-held key support level on Wednesday with weather models trending increasingly warmer. The Nymex May gas futures contract settled 5.5 cents lower at $2.517/MMBtu, and June settled 5.8 cents lower at $2.559.

Price action in the natural gas futures market has been as exciting as watching paint dry so far this week, and Wednesday’s swing brought the action down another notch. The Nymex May gas futures contract settled a meager one-tenth of a cent higher at $2.70, while June rose 0.3 cents to $2.742.

Traders kept a watchful eye on weather models Wednesday, but with little significant change to long-term outlooks, opted to hold their positions intact ahead of fresh storage data expected Thursday that is likely to reflect the first build of the season. The Nymex May gas futures contract settled only seven-tenths of a cent lower at $2.677, as did June, which landed at $2.715.

Facing bearish headwinds from a recent drop in export demand and a mild long-range temperature outlook, natural gas futures sold off into the front month expiration Wednesday. In the spot market, a supply glut and ongoing constraints continued to invert West Texas prices; the NGI Spot Gas National Avg. sank 16.5 cents to $2.305/MMBtu.

Recovering production volumes and weaker demand amid the transition to spring helped pressure natural gas futures lower Wednesday as the front month continued to bounce around a tight trading range.

U.S. natural gas prices are looking weaker over the longer term, despite the recent rally, and the crude oil outlook, at least for now, is waning as well, energy analysts said Monday.