U.S. gas: Futures bounce back from three-week low

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atural gas futures bounced back Tuesday from the three-week low reached Monday on bargain buying and a general upswing in energy futures.

Natural gas for June delivery settled up 9.2 cents, or 2.21%, at $4.246 a million British thermal units on the New York Mercantile Exchange. The benchmark contract ended Monday at its lowest levels since April 18 after a six-session skid.

The rebound rode rises in other commodities, including crude and heating oil, said Jay Levine, president of Enerjay LLC. in Portland, Maine. "Needless to say, the fundamentals have not changed meaningfully from yesterday to today to warrant a 9-cent increase," he said.

Last month lingering demand for heating fuel in northern markets, an early Southern heat wave that prompted an uptick in power demand for air conditioners, and spring maintenance outages at nuclear power plants pushed prices higher.

But recently, with weather moderating in much of the country and nuclear plants coming back on line, demand for natural gas has waned, pressuring prices lower.

Eventually prices fell far enough to attract bargain hunters, who should continue to buy into the market in the coming weeks, said Fain Shaffer, president of Infinity Trading Group in Medford, Ore.

"Between now and the middle of June I think we'll see speculators come in and do some bargain hunting ahead of hurricane season," he said.

Tropical weather is tracked by traders because of the disruptions hurricanes can cause to Gulf of Mexico production.

Though with so much of U.S. production coming now from shale formations buried deeply onshore, it's unclear what sort of dent an offshore disruption would make in U.S. supplies, Shaffer said.

The Energy Information Administration on Tuesday said that although gas in storage sits nearly 13% below last year's levels, it expects high production and summer weather more mild than last year's to push inventories toward an all-time high of 3.9 trillion cubic feet by the end of October.

Domestic supplies reached a record high of 3.84 trillion cubic feet last November.

The supply glut has stoked interest in exporting liquefied natural gas. U.S. regulators have before them three requests to export domestically produced natural gas from owners of liquefied natural gas import facilities.

Most recently, Southern Union Company (SUG) said Monday that is has, along with partner BG Group PLC (BG.LN), asked regulators for permission to export 2 billion cubic feet per day from an existing liquefied natural gas import facility in Lake Charles, La., over a 25-year period.



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