Natural gas inches up after weekly drop to more than 2-year lows

© Reuters.

By Barani Krishnan

Investing.com -- Natural gas prices inched higher Monday as buyers emerged at the lower level for the heating fuel, hammered to more than two-year lows by a selloff triggered by a largely warm winter for the 2022/23 season.

The front-month March gas contract on the New York Mercantile Exchange’s Henry Hub recovered virtually all that it lost on Friday to settle up 4.7 cents, or 1.8%, at $2.457 per mmBtu, or metric million British thermal units. It hit a session bottom of $2.343 in the previous session, marking a low not seen since Dec. 29, 2020, when it fell to $2.282.

The benchmark gas futures contract fell almost 16% last week, extending to more than 60% its tumble from December’s $7 high. Prior to that, it traded at a 14-year peak of $10 in August.

An unusually warm start to the 2022/23 winter has led to considerably less heating demand in the United States versus the norm, leaving more gas in storage than initially thought. Notwithstanding that, temperatures between Friday and Saturday averaged about 20 Fahrenheit (-6.7 Celsius) or lower in New York City and some other key locations in the U.S. Northeast, which accounts for the largest heating market in the United States.

According to the latest U.S. gas storage reading provided by the EIA, or Energy Information Administration, inventories of the heating fuel stood at 2.583 tcf, or trillion cubic feet for the week ended Jan. 27. That is up 9.4% from the year-ago level of 2.361 tcf, said the EIA. The agency will provide its next storage update on Feb. 9.