Natural gas futures turn lower after U.S. supply data, hit 3-week low

        Natural gas futures erased gains to hit a three-week low during U.S. morning hours on Thursday, after a report from the U.S. Energy Information Administration showed natural gas supplies fell broadly in line with market expectations last week.

On the New York Mercantile Exchange, natural gas futures for delivery in May traded at USD3.888 per million British thermal units during U.S. morning trade, down 0.3% on the day.     

Prices rose by as much as 1.1% earlier in the day to hit a session high of USD3.966 per million British thermal units.

The May contract traded at USD3.942 prior to the release of the U.S. Energy Information Administration report.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended March 29 fell by 94 billion cubic feet, compared to expectations for a drop of 91 billion cubic feet.

Inventories increased by 43 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 4 billion cubic feet.

Total U.S. natural gas storage stood at 1.687 trillion cubic feet as of last week. Stocks were 779 billion cubic feet less than last year at this time and 37 billion cubic feet below the five-year average of 1.724 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 76 billion cubic feet below the five-year average, following net withdrawals of 48 billion cubic feet.

Stocks in the Producing Region were 29 billion cubic feet below the five-year average of 724 billion cubic feet after a net withdrawal of 42 billion cubic feet.

Natural gas prices were higher earlier despite weather forecasts pointing to mild temperatures in the key Northeast and Midwest markets in the next six-to-10-days.

Natural-gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts for late-winter heating demand and early-spring cooling needs.

The heating season from November through March is the peak demand period for U.S. gas consumption. Nearly 50% of all U.S. households use gas for heating.

Nymex gas prices rose to USD4.118 per million British thermal units on March 28, the strongest level since September 1, 2011, boosted by calls for colder temperatures in major consuming regions across the U.S.

But with spring's low-demand shoulder season looming, further gains may be limited.

Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.

The National Oceanic and Atmospheric Administration in its one-month temperature forecast released Sunday called for above-normal temperatures across large swaths of the U.S. in April.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in May fell 1.4% to trade at USD93.13 a barrel, while heating oil for May delivery dropped 1.4% to trade at USD2.959 per gallon.

Courtesy : Investing.com