Investing.com - U.S. natural gas prices rose more than 4% on Tuesday, building on the previous session’s gains as a recovery in oil prices after steep declines in the previous session saw risk appetite sharpen.
Natural gas futures for delivery in May were up 4.23% to $2.02 per million British thermal units by 0931ET on the New York Mercantile Exchange.
Oil prices rose on Tuesday, as a strike by oil workers in Kuwait slashed the country’s output levels and overshadowed a deadlock between Iran and Saudi Arabia on a mooted production freeze intended to prop up prices.
The recovery in oil prices drove global stocks and commodity markets higher.
Natural gas ended the previous session with gains of 2.76% after updated weather forecasting models called for some colder-than-average temperatures in the next two weeks, which could increase natural gas consumption.
A warmer-than-normal 2015-2016 winter in the U.S. reduced demand for natural gas as an indoor-heating fuel.
Sluggish demand combined with record high production levels has pushed the natural-gas market into oversupply. Stockpiles are currently standing at more than 50% above their five-year average for this time of year.
The demand outlook is expected to moderate with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning, but analysts don’t expect the glut of natural gas to shrink until next winter or later.