Natural gas futures prices under pressure october 2 2012

Natural gas futures prices under pressure october 2 2012 : Natural gas futures came under pressure during U.S. morning trade on Tuesday, turning lower as investors cashed out of the market to lock in gains from a five-day rally that took prices to the highest level since December 2011 earlier in the session.

On the New York Mercantile Exchange, natural gas futures for delivery in November traded at USD3.463 per million British thermal units during U.S. morning trade, shedding 0.5%.      

It earlier rose by as much as 1.85% to trade at a session high of USD3.546 per million British thermal units, the strongest level since December 5, 2011.

Natural gas prices surged nearly 5% on Monday to the highest levels of the year, after updated weather forecasts showed cooler-than-normal temperatures were expected across most parts of the U.S. in the first two weeks of October.

Bullish speculators are betting on the cooler weather potentially leading to some early-Autumn demand for the heating fuel.

Natural gas demand typically rises in the summer as air-conditioning use boosts utility demand, then sinks in the fall as demand weakens ahead of the peak winter heating season.

Despite the recent upward move in prices, ongoing concerns over bloated U.S. inventory levels were likely to cap further gains in the near-term.

The U.S. Energy Information Administration said last week that natural gas storage in the U.S. rose by 80 billion cubic feet to a total of 3.576 trillion cubic feet, 8.6% above the five-year average level for the week.

Inventory did not top the 3.4-trillion cubic feet level in 2011 until October 5, with stocks peaking at a record 3.852 trillion cubic feet in November of last year.

Market analysts have warned that without strong demand through the early-Autumn shoulder season, gas inventories will reach the limits of available capacity later this year.

The shoulder season is the period in autumn when gas demand typically slackens and prices fall.

Early injection estimates for this week’s storage data range from 55 billion cubic feet to 81 billion cubic feet, compared to last year's build of 101 billion cubic feet. The five-year average change for the week is an increase of 78 billion cubic feet.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in November dipped 0.15% to trade at USD92.36 a barrel, while heating oil for November delivery eased up 0.05% to trade at USD3.137 per gallon

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