Natural gas futures - Weekly outlook: April 29 - May 3

Investing.com - Natural gas futures bounced off a two-week low in choppy volatile trade on Friday, as investors readjusted positions ahead of the expiration of the May contract.

Contract expiration often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.

On the New York Mercantile Exchange, natural gas futures for delivery in June climbed 1.2% on Friday to settle the week at USD4.248 per million British thermal units.

Despite Friday’s upbeat performance, the June contract still lost 4.25%, the first weekly decline in ten weeks.

Meanwhile, the May natural gas contract expired at the end of Friday’s trading session at USD4.190 per million British thermal units.

Sentiment on the commodity remained upbeat amid easing receding over U.S. inventory levels.

The U.S. Energy Information Administration said on Thursday that natural gas storage rose by 30 billion cubic feet last week, compared to expectations for an increase of 32 billion cubic feet.

Inventories rose by 43 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a rise of 50 billion cubic feet.

Total U.S. natural gas storage stood at 1.734 trillion cubic feet as of last week, 32% lower than last year at this time and 5.1% below the five-year average for this time of year.

Early injection estimates for this week’s storage data range from 25 billion cubic feet to 40 billion cubic feet.

Inventories rose by 31 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a rise of 67 billion cubic feet.

Typically this time of year, stockpiles begin to climb as milder spring temperatures curb demand for natural gas.

Nymex gas prices have risen sharply in recent weeks, gaining almost 30% since mid-February, boosted by calls for colder temperatures in major consuming regions across the U.S. that helped tighten the market.

The June contract rose to a 21-month high of USD4.428 per million British thermal units on April 19.

Still, some analysts have warned that further gains may be limited with spring's low-demand shoulder season looming.

Bank of America said in a research note Thursday that they expect natural gas futures to fall to USD3.50 per million British thermal units this summer before rebounding later this year.

Market participants continued to monitor shifting weather forecasts for the next couple of weeks in an attempt to gauge near term demand prospects.

The Commodity Weather Group said that mostly mild weather was expected across most parts of the U.S. over the next two weeks.

The heating season from November through March is the peak demand period for U.S. gas consumption. Nearly 50% of all U.S. households use gas for heating.

Gas use usually hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.

Elsewhere in the energy complex, light sweet crude oil futures for June delivery settled at USD92.89 a barrel by close of trade on Friday, rising 5% on the week.

Meanwhile, heating oil for June delivery advanced 2.6% over the week to settle at USD2.866 per gallon by close of trade Friday.