US GAS: Futures Climb On Bargain Buying

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NEW YORK (Dow Jones)--Natural gas futures climbed Friday as traders looked to buy contracts to capitalize on lower prices after Thursday's steep drop.

Natural gas for June delivery on the New York Mercantile Exchange was trading 3.2 cents higher, or 0.8%, at $4.012 a million British thermal units after opening 3 cents higher at $4.01/MMBtu.

Gas futures fell sharply Thursday after government data showed a larger-than-expected build in U.S. gas inventories, which are already ample on high volumes of output from onshore shale-rock formations.

The storage number "was a big surprise," said Phil Flynn, an analyst with PFG Best in Chicago. "Gas traders got knocked for a loop, and now we're back up again."

A Commerce Department report showing that the U.S. economy rose at a brisk 3.2% annual rate January through March also helped support gas prices. Gas traders have been eyeing economic data closely for signs of a recovery that would spark greater energy demand.

But moderate temperatures and a glut of supply continue to place downward pressure on prices. Total gas in U.S. storage as of April 23 was 1.912 trillion cubic feet, about 18.8% above the five-year average and 5.6% above last year's level.

Mild weather and robust production have led to large injections of gas into underground storage facilities over the past few weeks. Commodity Weather Group, a Bethesda, Md. private forecaster, was predicting mostly normal and above-normal temperatures across the continental U.S. from May 5 to May 14, with some cooler-than-normal temperatures in the northern tier of the country.

"Weather forecasts continue to provide little support for rising gas prices with forecasts from yesterday basically unchanged," analysts with Tradition Energy, a Stamford, Conn. energy advisory firm, wrote in a note to clients Friday.

-By Christine Buurma, Dow Jones Newswires; 212-416-2143; christine.buurma@dowjones.com



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