The U.S. Energy Department's weekly inventory release showed a smaller-than-expected increase in natural gas supplies. However, the injection was higher than the five-year average and the year-ago rise. Therefore, despite a slight recovery, natural gas prices remained close to the lowest levels in three years because of growing fears that soaring production is outpacing demand growth.
Natural gas futures broke out of a two-week range to finish higher for the week with buyers getting help from a drop in production. Futures were dragged higher by strengthening forward prices, which rose despite the absence of early summer heat in the weather forecasts to drive demand.
Natural gas futures opened sharply lower on Monday and the subsequent selling pressure drove the market through the previous session's low, reaffirming the downtrend on the daily chart. However, the move took the market into a technical support zone and the selling pressure subsided at $2.726.