Investing.com - Natural gas futures extended strong gains from the previous session to hit a one-week high on Tuesday, as market players continued to close out bets on lower prices.
On the New York Mercantile Exchange, natural gas for delivery in June rallied 1.17%, or 5.2 cents to trade at $4.523 per million British thermal units during U.S. morning hours.
Prices rose to a session high of $4.529 per million British thermal units earlier, the most since May 11.
Futures were likely to find support at $4.390 per million British thermal units, the low from May 19 and resistance at $4.548, the high from May 12.
Natural gas ended Monday’s session up 1.29%, or 5.7 cents to settle at $4.470, as hedge funds and large institutional investors covered short positions, or bets that prices will fall, a move known as short covering.
Prices fell to a six-week low of $4.289 per million British thermal units on May 15 as concerns over tight supplies eased.
The U.S. Energy Information Administration said that natural gas storage in the U.S. rose by 97 billion cubic feet last week, below forecasts for an increase of 99 billion cubic feet.
Total U.S. natural gas storage stood at 1.160 trillion cubic feet as of last week, 40% below their level this time last year and 45% below the five-year average.
Producers would need to add 2.6 trillion to 2.9 trillion cubic feet to storage by November 1 to meet typical winter demand, analysts said.
Early injection estimates for this Thursday’s storage data range from 88 billion cubic feet to 116 billion cubic feet. The five-year average change for the week is a build of 90 billion cubic feet.
Meanwhile, updated weather forecasting models called for mild springtime temperatures over much of the Midwest and Northeast, which was likely to lower heating demand.
Spring and fall see the weakest demand for natural gas in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.
Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.
Elsewhere on the Nymex, crude oil oil for delivery in July shed 0.23%, or 23 cents, to trade at $101.88 a barrel, while heating oil for June delivery declined 0.25% to trade at $2.933 per gallon.
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