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Natural Gas Adds Tepid Gains on EIA Report, Hurricane Florence

September 13, 2018 at 15:38 by Andrew Moran

Natural gas futures added small gains towards the end of the trading week as the US government reported that domestic supplies rose as the market anticipated. Investors will now look ahead to Hurricane Florence’s potential impact on the natural gas market.

November natural gas futures advanced $0.01, or 0.35%, to $2.83 per million British thermal units (btu) at 15:29 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices are on track for an impressive weekly gain, something the market needs after enduring a 4% loss over the last month.

According to the US Energy Information Administration (EIA), domestic supplies of natural gas increased by 69 billion cubic feet for the week ending September 7, which is on par with the analysts’ projections of a jump of 70 billion cubic feet. In total, natural gas stockpiles stand at 2.636 trillion cubic feet, down 662 billion cubic feet from the same time a year ago. They are also down 596 billion below the five-year average.

On Friday, the strongest hurricane to ever hit the US Southeast is expected to make landfall. The latest weather forecasts say that all of South Carolina, a large part of North Carolina, and parts of Alabama, Kentucky, Tennessee, and Virginia will experience torrential rainfall. Although experts believe that the storm will not significantly impact production, observers warn that it will significantly reduce demand.

So far, Florence has yet to affect natural gas prices.

In other energy markets, November gasoline futures slumped $0.04, or 2.1%, to $1.976 per gallon. October heating oil futures shed $0.025, or 1.1%, to $2.233 a gallon.

On Wednesday, the EIA reported that US crude oil stockpiles declined by 5.3 million barrels, while oil output surpassed 11 million barrels per day (bpd), making it the largest crude producer in the world. Gasoline inventories surged 1.3 million barrels, while distillate supplies soared 6.2 million barrels.

November West Texas Intermediate (WTI) crude futures tumbled $1.51, or 2.15%, to $68.86 a barrel. November Brent crude futures dropped $1.24, or 1.56%, to $78.5 per barrel.

The US Dollar Index slipped 0.23% to 94.59. A weaker buck is good for dollar-pegged commodities because it makes it cheaper for foreign investors to purchase.

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