NEW YORK—Natural-gas futures rose as traders covered short positions following the previous session's decline, but prices remain pressured by weak demand and record inventories.
Natural gas for March delivery recently were up 4.8 cents, or 2%, to $2.479 a million British thermal units on the New York Mercantile Exchange.
The rebound follows a nearly 2% decline after weather forecasters issued projections for milder weather in the coming weeks, implying weak heating demand.
"I think it's just a reaction from yesterday's selloff," said Tom Saal, senior vice president of energy trading at INTL Hencorp Futures in Miami. "We're kind of going sideways here."
Futures have budged little from a tight range around $2.50 a million British thermal units during all of February. The mild winter has curbed weather-driven heating demand this winter, sending prices plunging to 10-year lows last month. But a string of production cuts in recent weeks has halted the slide and prices seem to have found a floor—at least for now, say traders and analysts.
Amid those low prices, Chesapeake Energy
Corp. announced plans Monday to raise at least $10 billion this year selling holdings, including aging but still lucrative oil-and-gas fields in the Permian Basin in West Texas and New Mexico.
The move is aimed at shoring up the natural gas company's balance sheet to pay for new oil fields, as it contends with the slide in gas prices. In January, the company said it would slash its natural gas production and shift rigs to hunt for more-profitable oil.
In the meantime, weather forecasts show few signs of additional demand on the way.
Forecasts over the next two weeks from MDA EarthSat show above-average temperatures across the East Coast. Colder-than-usual temperatures, however, are seen across parts of the plains states and the Rocky Mountain region.
"There are still a greater number of warm signals than there are cold, making a strong, stable cold air mass unlikely," the forecaster wrote in its daily outlook.
The milder-than-usual temperatures have left natural-gas inventories at their highest levels ever for this time of year. Traders will receive the next update on inventories from the U.S. Energy Information Administration on Thursday.