NEW YORK (Dow Jones)--Natural gas futures rose slightly Wednesday on bargain buying and support from gains in other energy markets.
Natural gas for November delivery settled up 1.1 cent, or 0.3%, at $3.962 a million British thermal units on the New York Mercantile Exchange--the contract's second consecutive day of gains.
With no major market-specific news acting on gas prices Wednesday, futures received support from gains in crude oil and other energy futures as market participants added to their holdings of commodities, said Kent Bayazitoglu, an analyst with Houston-based Gelber & Associates.
Traders are awaiting an Energy Information Administration report that is expected to show that U.S. gas stockpiles last week rose by slightly more than average as autumn's seasonal lull in demand sets in. The amount of gas in U.S. storage is seen rising by 69 billion cubic feet in the week ended Sept. 24, according to the average prediction of 16 analysts and traders in a Dow Jones Newswires survey. During the same week last year, 65 billion cubic feet of gas were added to storage, and the five-year average injection is 67 billion cubic feet.
The EIA's report is scheduled for release at 10:30 a.m. EDT Thursday.
If the estimate is correct, inventories as of Sept. 24 will total 3.409 trillion cubic feet, 6.1% above the five-year average and 4.8% below last year's level for the same week. Inventories hit a record high in November, and haven't returned to normal levels since. Gas prices have been pressured lower this summer by the ongoing supply overhang, and analysts said the low prices compared with previous years spurred some bargain interest Wednesday.
Futures have traded between about $3.75/MMBtu and $4.05/MMBtu in recent weeks as traders weigh whether the demand outlook is strong enough to propel a typical seasonal rally, or if abundant supply will continue to send prices lower. Natural gas futures typically reach a seasonal bottom in August or September before rallying on expectations of coming winter heating demand.
Meanwhile, Tropical Storm Nicole formed over Cuba Wednesday, dumping heavy rain as it moves toward Florida and the Bahamas, the National Hurricane Center said. The storm is not seen threatening gas production infrastructure in the energy-rich Gulf of Mexico. Gas prices can spike if storms develop near the Gulf, which is home to about 11% of U.S. natural gas production.