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Natural Gas Continues Tumble After Weekly EIA Report

March 8, 2018 at 16:40 by Andrew Moran

Natural gas futures remain under pressure as the energy commodity maintains its steady decline. A new weekly US government report found that domestic stockpiles fell less than expected, which did not help natural gas prices towards the end of the trading week.

April natural gas futures slipped $0.025, or 0.90%, to $2.752 per million British thermal units (btu) at 15:22 GMT on Thursday on the New York Mercantile Exchange. Despite a strong start to 2018, natural gas prices have been plummeting since the middle of February.

Year-to-date, natural gas is relatively flat, advancing a tepid 0.33%.

According to the US Energy Information Administration (EIA), natural gas stockpiles dropped by 57 billion cubic feet for the week ending March 2, which is lower than initial forecasts of 59 billion. Butthe five-year withdrawal average is 129 billion. Total supplies now stand at 1.625 trillion cubic feet, down 680 billion cubic feet from a week ago, and 300 billion below the five-year average.

It was reported on Thursday that US natural gas exporters see another major boom occurring over the next few years, buoyed by demand from China and elsewhere in Asia. The US projects exports to top 3.6 billion cubic feet of natural gas per day in 2018, which could surge to as much as 12 billion cubic feet by the start of the next decade.

Kevin Brown, research analyst at Tortoise Capital Advisors, told CNBC:

As we saw this winter, demand in Asia and China kind of surprised the market. What we saw was supposed to be a market that might not be hitting supply-demand balance until the mid-2020s.

It [is] at a place now where we see the balance coming maybe earlier, in the 2020s, pushing people to have to make that second wave of LNG investment.

Other energy markets are witnesses a sea of red. April West Texas Intermediate (WTI) crude futures fell $0.46, or 0.75%, to $60.69 per barrel; and May Brent crude futures dipped $0.13, or 0.20%, to $64.21 a barrel. Meanwhile, April gasoline futures slid $0.02, or 1.07%, to $1.889 per gallon; and April heating oil futures are flat at $1.875 a gallon.

On Wednesday, the EIA reported that US crude stockpiles edged up 2.4 million barrels, while domestic output climbed 86,000 barrels to 10.369 million barrels per day (bpd). Gasoline supplies decreased 800,000 barrels, while distillate stockpiles plummeted 600,000 barrels.

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