U.S. natural gas climbed for a second day on speculation that the cheapest prices since the 1990s will stoke demand from power plants.
Gas consumption from electricity generators was up 4.5 percent Sunday from a week earlier, data from PointLogic Energy show. Futures dropped to a 17-year low last week as mild weather expanded a stockpile glut.
An unusually warm winter has left stockpiles at the biggest surplus to the five-year average since 2012, sending prices tumbling. Output from shale reservoirs is overwhelming demand, putting inventories at risk of testing physical storage constraints later this year.
“The silver lining for bulls is that we could see more power plants switching to gas from coal at these prices,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “Futures are getting pretty close to oversold territory.”
Natural gas for April delivery rose 2.4 cents to settle at $1.69 per million British thermal units on the New York Mercantile Exchange. Prices fell to $1.639 on March 3, the lowest close since Feb. 26, 1999.