The NYMEX June natural gas futures contract settled 7.2 cents higher at $2.465/MMBtu because of technical buying and expectations for a below-average storage build, sources said.
The contract has gained ground for three straight sessions, adding on a total of 18.6 cents, or 8.2%.
"People are guessing that the storage report due out [Thursday] will be bullish, and that's about all there is to it," Citi Futures Perspective analyst Tim Evans said.
A Platts poll of analysts suggests the US Energy Information Administration will estimate a build to storage of between 31 Bcf and 35 Bcf, far below the five-year-average injection of 84 Bcf.
Gelber & Associates analyst Pax Saunders also pointed to technical momentum, although he noted that the contract appears overbought, with the relative strength index "banging against 68 again." The RSI is a technical measure of market momentum, and an index of 70 or above generally indicates the market is overbought.
Evans believes any additional upside will be limited. "The higher we go, the less upside potential we have left," he said. The market is starting to near a point where "coal-to-gas switching becomes gas-to-coal."
The contract traded Wednesday between $2.402/MMBtu and $2.509/MMBtu.
