--Gas futures continue retreat from Friday's rally
--After short-covering, focus turns back to high storage injections
--Analysts see triple-digit inventory build this week.
By Jerry A. DiColo Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Natural gas futures fell Tuesday as traders refocus on rising U.S. supplies after a rally higher last week.
Natural gas for November delivery recently traded 5.4 cents, or 1.5%, lower at $3.634 a million British thermal units on the New York Mercantile Exchange.
After futures gained more than 5% Friday, investors are again taking note of high storage injections over the past month and expectations of further builds this week. Analysts attributed the recent rally to short-covering, when traders betting on falling prices start buying to lock in gains.
"The complex is still contending with some exceptionally strong storage injections that will likely be seen again per Thursday's report. We feel that a build similar to last week's 112 bcf upswing is possible," said Jim Ritterbusch, head of energy advisor Ritterbusch and Associates, in a client note.
Over the past four weeks, more than 400-bcf of natural gas has been added to storage, bringing levels close to the multi-year highs reached last year.
Storage levels typically increase during the so-called "shoulder season," the period in autumn after air-conditioning demand falls but before heating begins. But this year's increase, aided by unusually warm temperatures brought by the La Nina weather system in the Pacific Ocean, offers a much larger cushion than in most years as winter approaches.
Drew Wozniak, an analyst at ICAP Energy, said that long term weather forecasts that show "near normal" temperatures "should give us another 100-plus storage number," this week, a level he said was "psychologically bearish no matter how you slice it."