Natural gas rallies as inventories gain matches expectations

Natural gas futures rose more than 2% to a one-week high after the Energy Information Administration reported that U.S. natural gas inventories rose in line with analysts expectations.

On the New York Mercantile Exchange, natural gas for delivery in October rose by 2.57% to $3.659 per million British thermal units at 14:48 GMT. Futures rose to a session high of $3.662 per mBtu minutes after the release of the report, while days low was touched at $3.537. The power-plant fuel slipped 1% on Wednesday but extended its weekly decline to over 3.6% following Thursdays advance.

The Energy Information Administration said in its weekly report that U.S. natural gas stockpiles added 65 billion cubic feet in the week ended September 6, above the five-year average build of 62 billion. EIAs statistics however outperformed the median estimate of six analysts, surveyed by Bloomberg, who predicted a 68 billion gain. Stockpiles increased by 27 billion cubic feet in the comparable week a year earlier.

Total gas held in underground storage hubs now equaled 3 253 billion cubic feet, and were 172 billion, or 5%, below last years 3 425 billion. The surplus over the five-year average of 3.207 trillion cubic feet remained unchanged at 1.4% from the preceding week.

The report showed that after a 49 billion cubic feet injection, stocks in the East Region were 114 billion cubic feet below the five-year average. Meanwhile, inventories in the Producing Region received a 14 billion injection and were 106 billion above the five-year average of 993 billion cubic feet.

The fuel also drew support as updated weather forecasts showed higher-than-usual temperatures across most of the U.S. Midwest through mid-September. When warmer-than-normal weather is expected, natural gas surges as increased electricity demand to power air-conditioning calls for more supply of the fuel, which is used for a quarter of the U.S. electricity generation. Mild temperatures have the opposite effect. According to the Energy Information Administration, power generation accounts for 32% of U.S. gas demand.