Investing.com - Natural gas futures were up sharply during U.S. morning hours on Thursday, adding to strong gains after a report from the U.S. Energy Information Administration showed natural gas supplies fell more-than-expected last week.
On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD3.172 per million British thermal units during U.S. morning trade, up 1.9% on the day.
It earlier rose by as much as 2.7% to trade at a session high of USD3.197 per million British thermal units.
The January contract traded at USD3.160 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 January 4 fell by 201 billion cubic feet, compared to expectations for a decline of 186 billion cubic feet.
Inventories fell by 95 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 149 billion cubic feet.
Total U.S. natural gas storage stood at 3.316 trillion cubic feet as of last week. Stocks were 88 billion cubic feet less than last year at this time and 320 billion cubic feet above the five-year average of 2.996 trillion cubic feet for this time of year.
The report showed that in the East Region, stocks were 93 billion cubic feet above the five-year average, following net withdrawals of 113 billion cubic feet.
Stocks in the Producing Region were 156 billion cubic feet above the five-year average of 996 billion cubic feet, after a net withdrawal of 61billion cubic feet.
Meanwhile, updated weather forecasts showed that mild weather was expected across key parts of the U.S. later in January and into early-February, dampening sentiment on the heating fuel.
The U.S. National Weather Service's six-to-10-day forecast issued earlier called for above-normal temperatures for most of the eastern third of the country.
Meanwhile, weather service provider MDA Weather Services' 11-to-15-day outlook called for mostly normal readings across the U.S., with above-normal temperatures forecast for the eastern half of the country.
Bearish speculators are betting on the mild weather reducing winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts on winter heating demand.
The heating fuel has lost nearly 20% since touching a 14-month high of USD4.001 per million British thermal units on November 26, on speculation that temperatures won't be cold enough to erase a surplus of the fuel in storage.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in January was little changed to trade at USD89.95 a barrel, while heating oil for January delivery added 0.4% to trade at USD3.048 per gallon.
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