- Natural gas futures trimmed gains on Thursday to come off the highest levels of the session after data showed that U.S. natural gas supplies fell less-than-expected last week despite posting a record drop.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD4.406 per million British thermal units during U.S. morning trade, up 1.85%. Nymex gas prices traded at USD4.468 prior to the release of the supply data.

Nymex February gas futures rallied by as much as 3.8% earlier in the day to hit a session high of USD4.495, the strongest level since January 7. The February contract settled 1.01% lower on Wednesday to end at USD4.325 per million British thermal units.

Natural gas futures were likely to find support at USD4.318 per million British thermal units, the low from January 15 and resistance at USD4.511, the high from December 26.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended January 10 fell by 287 billion cubic feet, the largest drop on record but below expectations for a decline of 301 billion cubic feet.

The five-year average change for the week is a decline of 159 billion cubic feet. The previous record drop was a decrease of 285 billion cubic feet in the seven days ended December 13, Energy Information Administration data show.

Total U.S. natural gas storage stood at 2.530 trillion cubic feet. Stocks were 659 billion cubic feet less than last year at this time and 443 billion cubic feet below the five-year average of 2.973 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 292 billion cubic feet below the five-year average, following net withdrawals of 149 billion cubic feet.

Stocks in the Producing Region were 104 billion cubic feet below the five-year average of 1.016 billion cubic feet after a net withdrawal of 107 billion cubic feet.

Meanwhile, market players continued to focus on weather forecasts to gauge the strength of demand for the fuel.

Updated weather forecasting models called for colder-than-normal temperatures in the week ahead. MDA Weather Services forecast cold weather will move into the Eastern half of the country over the next six-to-ten days.

Bullish speculators are betting that the cool weather will increase demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March dipped 0.4% to trade at USD93.98 a barrel, while heating oil for February delivery advanced 0.2% to trade at USD2.985 per gallon.

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