-- US natural gas futures climbed in midday trading on Thursday after government data showed a smaller-than-expected increase in storage, prompting short covering that lifted prices.
Both the front-month Henry Hub contract and the continuous contract rose 4.34% to $2.76 per million British thermal units.
The US Energy Information Administration reported that natural gas inventories increased by 79 billion cubic feet in the week ended April 24.
The build was below the 103 Bcf injection reported the previous week and the 105 Bcf increase recorded in the same period last year, though it remained 20 Bcf above the five-year average build of 63 Bcf. Market participants had expected an increase of as much as 83 Bcf, making the reported figure a small downside surprise.
Total inventories now stand at 2,142 Bcf, which is 116 Bcf above year-ago levels and 153 Bcf higher than the five-year average of 1,989 Bcf.
"Traders went into the number bracing for another oversized build on top of the 103 billion cubic feet injection from the prior week. The data came in tighter than expected and that was enough to trigger some short covering. That is the whole story behind today's bounce," FX Empire wrote.
In demand sectors, NRG Energy said power burn is expected to be 2.8 Bcf per day lower on Thursday, offset by a 0.4 Bcf/d increase in industrial demand and a 1.7 Bcf/d rise in residential and commercial demand.
Near-term demand forecasts for the April 30-May 6 period were revised colder. NatGasWeather.com said cooler-than-normal temperatures are expected across the Midwest, Ohio Valley and Northeast, with lows in the upper 20s to 30s degrees Fahrenheit. Overall demand is projected to remain moderate over the next seven days.
Natural gas production has held steady above 106 Bcf/d over the past week, rising 0.3 Bcf/d day over day to 106.4 Bcf/d on Thursday, NRG Energy said. Feedgas flows to liquefied natural gas exports have remained relatively strong between 18 and 19 Bcf/d, though they are forecast to dip to 17.6 Bcf/d on Thursday.