NEO_99
Forumer storico
(Dow Jones)--Natural gas futures rebounded after dipping below the $4 mark Monday, closing up sharply as traders viewed the previous six-day slide as a good opportunity to buy.
Natural gas for May delivery settled up 6.7 cents, or 1.7%, higher, at $4.108 a million British thermal units on the New York Mercantile Exchange.
Earlier Monday, futures fell below $4/MMBtu for the first time since mid-March, under pressure "as mild spring weather and limited seasonal demand continues to depress the gas market," analysts with Tradition Energy wrote in a client note.
But the drop below the $4/MMBtu level, seen as a significant level of support, triggered buying interest and short-covering institutional investors, analyst Jim Ritterbusch with Ritterbusch and Associates told clients. Investors cover shorts, or bets that prices will fall, by buying back securities when they believe a downward move in prices is over.
"It's a bounce, but this is probably a dead cat bounce," said Jason Schenker, an analyst with Prestige Economics in Austin, Texas. He said low heating demand during the spring season, plus the likely increase in supplies in storage over coming months would put a lid on further price increases.
The declines led to some buying interest from traders who viewed the market as relatively cheap, said Ed Kennedy, a senior vice president of energy trading with INTL Hencorp Futures. "The only bullish thing in the market is the price itself," he said. "We tested support [near $4] and the support is there."
Futures had slid 7.9% this month through Friday's close, erasing much of the gain made in March as a burst of early spring cold boosted demand for the heating fuel.
U.S. inventories emerged from the winter withdrawal season at 1.579 trillion cubic feet, only 0.6% above the five-year average. That was a sharp departure from November's record highs at almost 10% above average, as a colder-than-normal winter led to large draws from storage.
Inventories typically increase from April through October as companies stock up for the next winter's heating needs.
Analysts say the market remains under pressure from the view that North American gas output will outpace demand this year, with production from shale rock formations expected to rise. Access to credit and better returns from drilling in areas rich in higher-priced crude oil and natural gas liquids have helped producers fund their dry gas drilling programs despite low prices.
Natural gas for May delivery settled up 6.7 cents, or 1.7%, higher, at $4.108 a million British thermal units on the New York Mercantile Exchange.
Earlier Monday, futures fell below $4/MMBtu for the first time since mid-March, under pressure "as mild spring weather and limited seasonal demand continues to depress the gas market," analysts with Tradition Energy wrote in a client note.
But the drop below the $4/MMBtu level, seen as a significant level of support, triggered buying interest and short-covering institutional investors, analyst Jim Ritterbusch with Ritterbusch and Associates told clients. Investors cover shorts, or bets that prices will fall, by buying back securities when they believe a downward move in prices is over.
"It's a bounce, but this is probably a dead cat bounce," said Jason Schenker, an analyst with Prestige Economics in Austin, Texas. He said low heating demand during the spring season, plus the likely increase in supplies in storage over coming months would put a lid on further price increases.
The declines led to some buying interest from traders who viewed the market as relatively cheap, said Ed Kennedy, a senior vice president of energy trading with INTL Hencorp Futures. "The only bullish thing in the market is the price itself," he said. "We tested support [near $4] and the support is there."
Futures had slid 7.9% this month through Friday's close, erasing much of the gain made in March as a burst of early spring cold boosted demand for the heating fuel.
U.S. inventories emerged from the winter withdrawal season at 1.579 trillion cubic feet, only 0.6% above the five-year average. That was a sharp departure from November's record highs at almost 10% above average, as a colder-than-normal winter led to large draws from storage.
Inventories typically increase from April through October as companies stock up for the next winter's heating needs.
Analysts say the market remains under pressure from the view that North American gas output will outpace demand this year, with production from shale rock formations expected to rise. Access to credit and better returns from drilling in areas rich in higher-priced crude oil and natural gas liquids have helped producers fund their dry gas drilling programs despite low prices.
