NEW YORK (Dow Jones)--Natural gas futures traded flat Wednesday morning after a 2% run-up the day before, with analysts expecting the market to tread water until weekly inventory figures are released on Thursday.
Natural gas for November delivery was down 2 cents, or 0.6%, at $3.638 a million British thermal units on the New York Mercantile Exchange. The November contract is set to expire Thursday, and the December contract is trading nearly 20 cents higher, at $3.830 a million BTUs.
"The market is oscillating betwixt little reason to buy and little reason to sell," Matt Smith of Summit Energy said in a note.
Futures have largely traded in a range between $3.500 and $3.750 since the beginning of the month, as the so-called shoulder season of mild weather holds down natural gas demand. Weather is a strong driver of demand because natural gas is a key component in power generation, which rises and falls as people heat or cool their homes.
Colder weather has been predicted for much of the Midwest and Northeast in the next six to 10 days, with the National Weather Service reporting New York and New England could see light snow later in the week. Still, recent reports from the Energy Information Administration have found stored inventories growing much larger than average. As a result, the market has largely been in a holding pattern as traders look for direction.
"Inventories are high and rising, likely to match last year's record," said Kyle Cooper, managing partner of IAF Advisors in Houston, Texas. "But not a time of year you really want to get short" because of the oncoming fall and winter weather. "That's why it's struggling," he added.