By Barani Krishnan

Investing.com — U.S. natural gas futures resumed their weekly trend in the red, closing the current week down almost 10% after last week’s respite from three straight weeks of deficit.

To add to the somber mood of longs in the market, the front-month contract took a fresh dive beneath the key $2 support, a reminder that new lows may be made in the coming days.

Natural gas for settled at $2.0110 per mmBtu, or metric million British thermal units, on the New York Mercantile Exchange’s Henry Hub — down 14.4 cents, or 6.7%, on the day.

For the week, the front-month fell 9.3%. Over the past five weeks, it has lost a net 33%.

Technical readings indicate natural gas prices could rebound in the coming week, but the front-month has to sustain above $2.17, said Sunil Kumar Dixit, chief technical strategist at SKCharting.com.  “If that level holds, we can expect further upside, clearing through $2.30 to ease the way for a test of the $2.60 resistance.”

The latest weekly slump in gas prices came after a government report showing in the United States fell just a shade below forecast levels last week as cooler-than-normal weather from a historical perspective led to steadier heating demand.

Utilities pulled 23 billion cubic feet, or bcf, from natural gas storage for the week ended March 31, leaving a balance of 1.83 trillion cubic feet, or tcf, the report by the U.S. Energy Information Administration, or EIA, showed.

Industry analysts tracked by Investing.com had forecast a draw of 21 bcf instead for the week.

“The 23-bcf withdrawal reported today was largely in line with market expectations, and it marks the final storage draw of the 2022-23 withdrawal season,” said Houston-based energy markets advisory service Gelber & Associates.

“Our preliminary estimates suggest that next week’s injection will be approximately 17 bcf, which will further widen the gap between current inventories and the 5-year average.”

Temperature analysis from Reuters-associated data provider Refinitiv showed there were around 113 heating degree days, or HDDs, last week, which was more than the 30-year average of 104 HDDs for the period.

HDDs measure the number of degrees a day’s average temperature is below 65 degrees Fahrenheit (18 degrees Celsius) to estimate demand to heat homes and businesses.

Notwithstanding the larger-than-expected draw, this year’s gas storage balance is one of the highest in recent memory and remains the bane of bulls in the market who’ve been trying to restart a spectacular rally they enjoyed just months ago, before an unusually warm winter season led to less heating demand.

Storage is currently 32% higher from a year ago and almost 20% up from the five-year average, the EIA said.

The unusually high storage had triggered a selloff in gas futures since late last year, sending the benchmark front-month on the New York Mercantile Exchange’s Henry Hub to current levels of around $2 from 14-year highs of $10 in August.

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