Forex Pros - Last week saw natural gas prices rebound from a five-week low on Friday as indications U.S. natural gas production was slowing boosted prices, which were also supported by bargain buying.
On the New York Mercantile Exchange, natural gas futures for delivery in June settled at USD4.256 per million British thermal units by close of trade on Friday, edging 0.3% higher over the week.
Natural gas prices jumped 4% on Friday, erasing the previous day's steep decline after industry research group Baker Hughes said that the number of active rigs drilling for natural gas in the U.S. last week fell 0.9% to 866, the lowest level since January 2010.
Traders watch the rig count closely for signs that producers are pulling back to limit supply growth. The rig count is down 5.8% so far in 2011. According to the group, a drop to the 800-to-850 rig range would be necessary to begin to balance the market.
On Thursday, prices tumbled to the lowest level since April 14 after the Energy Information Administration reported the largest injection of gas into U.S. storage so far this year, narrowing the deficit between current and typical storage levels for the first time in eight weeks.
U.S. natural gas stockpiles rose by 92 billion cubic feet last week, surpassing expectations for an increase of 90 billon cubic feet. Supplies climbed 76 billion cubic feet in the same week a year earlier. The five-year average change for the week is an increase of 91 billion cubic feet.
The price drop sparked some bargain buying from traders reluctant to bet that prices would fall further as forecasts showed warmer-than-normal weather in the eastern U.S. states during the next two weeks, boosting demand expectations for gas-fired electricity to power air conditioners.
The Commodity Weather Group said Friday that next week "should be the warmest of the season so far for the East Coast cities as temperatures persistently reach the 80s. Combined with moderate humidity levels, it could feel like the 90s at times."
Elsewhere, light sweet crude oil futures for July delivery traded at USD99.94 a barrel by close of trade on Friday, rising 1.4% over the week, while heating oil for June delivery traded at USD2.916 per gallon, easing down 0.15% over the week.