Investing.com - U.S. natural gas futures rebounded from the prior session's steep declines on Tuesday, but gains were limited after meteorologists predicted warmer-than-normal temperatures in much of the U.S. in the weeks ahead.
Natural gas for delivery in December on the New York Mercantile Exchange tacked on 2.5 cents, or 1.13%, to trade at $2.282 per million British thermal units during U.S. morning hours.
A day earlier, natural gas prices lost 6.5 cents, or 2.8%, as forecasts pointed to unseasonably warm readings for early November. Bearish speculators bet on the warm weather reducing early-winter demand for the heating fuel.
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, U.S. supply levels remained in focus. Natural gas supplies in storage rose by 63 billion cubic feet last week, according to the Energy Information Administration, below expectations for an increase of 69 billion.
That compared with builds of 81 billion cubic feet in the prior week, 87 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 81 billion cubic feet.
The EIA's next storage report slated for release on Thursday is expected to show a build of approximately 75 billion cubic feet for the week ending October 29.
Supplies rose by 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 3.877 trillion cubic feet, 4.1% above the five-year average for this time of year and 12% above their level 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 four last week to 197. Natural gas traders closely watch the rig count to gauge future supply growth.
Elsewhere on the Nymex, crude oil for delivery in December rose 64 cents, or 1.4%, to trade at $46.78 a barrel, while heating oil for December delivery advanced 1.2% to trade at $1.525 per gallon.