-- US natural gas futures inched higher in after-hours trading on Wednesday, supported by short covering ahead of the US government's weekly storage report due Thursday.
The front-month Henry Hub contract and the continuous benchmark both rose 0.54% to settle at $2.613 per million British thermal units.
Prices posted modest gains during the regular session as well, with market participants citing technical buying after a prolonged decline left the market oversold, according to Barchart.
Wednesday's rebound snapped a five-session losing streak, driven by weak seasonal demand and strong production that have swelled a supply surplus, pressured prices, and are expected to weigh on storage through April. Dennis Kissler of BOK Financial, quoted by The Wall Street Journal, said, "I believe the market is underestimating true U.S. demand once summer cooling demand arrives."
Natural gas futures fell to a 17-month low on Tuesday amid unseasonably mild spring weather that has curbed heating demand and allowed inventories to build. Forecasts from Commodity Weather Group indicate above-average temperatures across the eastern two-thirds of the US through Apr. 19, extending into the Upper Midwest from Apr. 20 to 24.
Market focus is now on Thursday's storage data, which is widely expected to show inventories significantly above historical norms. The Wall Street Journal reported that the surplus could approach 100 billion cubic feet above normal seasonal levels.
Gelber & Associates estimates a 48 Bcf injection for the week, well above the 16 Bcf increase recorded in the same period last year. NRG Energy projects an even larger 66 Bcf injection for the week ending Apr. 10. If realized, NRG said inventories would stand about 115 Bcf above the five-year average and 113 Bcf higher than a year earlier.
Meanwhile, fundamentals continue to reflect ample supply. Output in the Lower 48 states was estimated at 109.6 Bcf/d on Wednesday, up 2.0% from a year earlier, according to Barchart, citing BNEF data. Demand was estimated at 68.5 Bcf/d, down 6.0% year-over-year, while liquefied natural gas export flows remained near capacity at 19.8 Bcf/d, but slightly lower on the week.