By Barani Krishnan
Investing.com -- The selloff in natural gas paused Friday, with the market posting its first weekly gain in eight, as bears in the market reassessed their positions after taking the heating fuel to 2-½ year lows in the previous session.
The front-month March gas contract on the New York Mercantile Exchange’s Henry Hub settled up 6.9 cents, or 2.8%, at $2.5140 per mmBtu, or metric million British thermal units.
For the week, however, the benchmark U.S. gas contract rose 4.3%, posting its first weekly gain since the week ended Dec. 9. Gas futures lost a cumulative 63% in seven weeks prior to that.
On Thursday, March gas fell to $2.351, plumbing the lowest level for a front-month gas contract on the Henry Hub since Sept. 28, 2020, when the benchmark contract then went down to $2.02.
An unusually warm start to the 2022/23 winter season has led to considerably less heating demand in the United States versus the norm, leaving more gas in storage than initially thought.
At the close of last week, U.S. gas-in-storage stood at 2.366 tcf, or trillion cubic feet, up 10.9% from the year-ago level of 2.249 tcf, data from the EIA, or Energy Information Administration, showed.
Utilities drew a higher-than-forecast 217 bcf, or billion cubic feet, from storage for heating and electricity generation last week, the EIA said.
Analysts tracked by Investing.com had expected a draw of 195 bcf for the week ended Feb. 3, above the consumption of 151 bcf seen in the prior week to Jan. 27.
“The bullishness of the withdrawal was driven by colder-than-than-normal temperatures, especially at the end of the reflective storage week,” analysts at Houston-based energy markets consultancy Gelber & Associates said. “However, improving imbalances such as this aren’t significantly meaningful when they’re not accompanied by a supportive temperature outlook.”
Responding to the warmth and lackluster storage draws, gas prices plunged from a 14-year high of $10 per mmBtu in August, reaching $7 in December and mid-$2 levels this week amid forecasts for bitter cold here and there.