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Natural gas futures climb 3.3%, top $4/MMbtu level

BY DAVID BIRD

NEW YORK -- Natural-gas futures surged Friday afternoon, retaking the $4/MMbtu level and erasing a steep day-earlier loss. The price jump came after news that the Obama administration approved a second terminal to export natural gas, a sign that the prospective benefits from exporting energy outweigh concerns about possible negative impacts on the U.S. economy. But traders noted that exports would be a long way off and the wouldn' t impact near-term prices.

Traders said the fact that prices didn' t continue lower to test recent lows below $3.90/MMbtu sent a strong signal to investors guided by charts. Prices then moved above $4/MMBtu, around the 50-day moving average, triggering further buying. Prices hit an intraday high of $4.096/MMbtu, fractionally above the peak of a day earlier and the highest intraday price since May 2.

Updated midday forecasts calling for above-normal temperatures that will spark greater demand from utilities for power to run air conditioners added to the bullish sentiment, traders said.

Matt Smith, analyst at Schneider Electric, said the market' s failure to set new lows, "combined with updated weather outlooks pointing to a bit of cooling demand, and we are seeing some short-covering into the weekend."

June-delivery gas futures on the New York Mercantile Exchange was 13 cents, or 3.3%, higher at $4.06 per million British thermal units. The rally came after prices were modestly up for most of the session on bargain hunting after a steep day-earlier drop on rising inventories.

Prices posted the biggest drop in two weeks on Thursday, tumbling 3.4% of 13.8 cents, after government data showed gas storage rose last week by even more than the expected outsized gain.

Dow Jones Newswires

05/17/2013

 

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