Investing.com - Natural gas futures rose to a two-week high on Friday, as colder forecasts and a smaller-than-expected storage injection boosted prices.
On the New York Mercantile Exchange, natural gas for delivery in December inched up 0.7 cents, or 0.3%, to close the week at $2.371 per million British thermal units. It earlier rose to $2.398, the highest since October 22.
A day earlier, futures spiked 10.2 cents, or 4.51%, after data showed natural gas supplies rose less than expected last week.
For the week, the December natural gas contract gained 5.0 cents, or 2.15%, the second straight weekly rise.
Updated weather forecasting models released Friday afternoon showed a return to cool weather in the U.S. Midwest and mid-Atlantic regions, following a warm spell earlier in the month.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early-winter heating demand.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Meanwhile, the U.S. Energy Information Administration said Thursday natural gas supplies in storage rose by 52 billion cubic feet last week, below expectations for an increase of 60 billion.
That compared with builds of 63 billion cubic feet in the prior week, 91 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 68 billion cubic feet.
Total U.S. natural gas storage stood at 3.929 trillion cubic feet, 3.9% above the five-year average for this time of year and almost 10% higher than levels at this time a year ago.
Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter’s unusually strong demand.
Stockpiles are set to reach a record by the end of this month. The EIA sees storage levels peaking at 3.956 trillion in November, which would top the November 2012 high of 3.929 trillion.
The North American natural-gas market has been mired in a supply glut for years amid robust output.
Industry research group Baker Hughes (N:BHI) said late Friday that the number of rigs drilling for natural gas in the U.S. increased by two last week to 199. Natural gas traders closely watch the rig count to gauge future supply growth.
The EIA's next storage report slated for release on Friday, November 13 is expected to show a build of approximately 45 billion cubic feet for the week ending November 6.
Supplies rose by 40 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 30 billion cubic feet.
The report comes out one day later than usual due to Wednesday's Veterans Day's holiday in the U.S.
Elsewhere on the Nymex, crude oil for December delivery settled at $44.29 a barrel by close of trade on Friday, down $2.14, or 4.94%, on the week, while heating oil for December delivery shed 0.65% on the week to settle at $1.489 per gallon.