March NYMEX natural gas retraces some steps to $2.606/MMBtu in ‘technical buying’
NYMEX March natural gas futures climbed in technical buying overnight in the US ahead of Tuesday’s open. At 6:50 am ET (1150 GMT) the contract was 5.4 cents higher at $2.606/MMBtu.
March gas shed 3.2 cents in the previous session falling through the key support level at $2.57/MMBtu in its fourth consecutive day on the downtrend but sentiment of oversold conditions is inspiring a fresh round of buying, as traders consider changing fundamentals.
Recent cold weather is seen to have bolstered demand and encouraged a step higher in the rate of weekly storage draws when the US Energy Information Administration releases its next inventory report on Thursday that will cover the week ended February 9, with preliminary estimates spanning withdrawals in the mid- to upper 170s Bcf.
That would compare to a 120 Bcf year-ago pull and the 154 Bcf five-year-average drawdown. It would also come on the heels of a draw of just 119 Bcf the previous week.
Cooler weather during the review week to February 7, much of which will be included in the upcoming storage report, is seen to have driven a 20% week-on-week boost in consumption in the residential and commercial sectors that contributed to a 13% increase in total US natural gas consumption, the EIA’s latest Natural Gas Weekly Update showed.
Warming in store for the major heat-consuming regions in the midrange, however, spell renewed demand weakness in the weeks ahead likely to slow anew the rate of inventory withdrawals.