Investing.com - Natural gas futures rallied to the highest level since January 2010 earlier on Wednesday, before turning lower as a round of profit taking kicked in.
On the New York Mercantile Exchange, natural gas futures for delivery in March surged to USD5.735 per million British thermal units, the most since January 2010, before erasing gains to trade at USD5.294 during U.S. morning trade, down 1.5%.
The March contract soared 9.58% on Tuesday to settle at USD5.375 per million British thermal units.
Natural gas futures were likely to find support at USD4.942 per million British thermal units, the low from February 4 and resistance at USD5.735, the daily high.
Updated weather forecasting models called for severe cold weather across the U.S. during the next three-to-five days, with heavy snow expected in the Northeast and Midwest.
Bullish speculators are betting that colder weather will increase demand for the heating fuel.
The U.S. Northeast and Midwest are key gas-consuming regions. The heating season from November through March is the peak demand period for U.S. gas consumption.
Prices were also supported amid speculation weekly supply data due on Thursday will show a larger-than-expected drop in U.S. natural gas inventories.
Early withdrawal estimates range from 250 billion cubic feet to 281 billion cubic feet, compared to a drop of 129 billion cubic feet during the same week a year earlier.
Total U.S. natural gas storage fell by 230 billion cubic feet last week to 2.193 trillion cubic feet, approximately 17% below the five-year average for this time of year.
Natural-gas inventories have fallen by nearly 40% since November as frigid winter temperatures in the U.S. led households to burn a higher than normal amount of the fuel in furnaces to heat their homes.
Some market analysts expect supplies at the end of the winter heating season in March to be at their lowest in six years.
Wall Street investment bank Goldman Sachs lowered its forecast for inventory levels at the end of March to 1.39 trillion cubic feet, driven by the recent “polar vortex.” Goldman had previously estimated U.S. gas inventories at 1.61 trillion by the end of March.
According to the bank, natural gas prices will average USD4.50 per million British thermal units, up from a previous estimate of USD4.25.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March rose 0.45% to trade at USD97.63 a barrel, while heating oil for March delivery added 0.85% to trade at USD3.007 per gallon.