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Natural Gas Dips on Jump in US Inventories, Supply Forecasts

October 10, 2019 at 16:31 by Andrew Moran

Natural gas futures are trading lower on Thursday after the US government reported an increase in domestic inventories that were in line with market projections. The energy commodity is also slumping on concerns of a potential global supply glut as experts are forecasting greater output in the next several years.

November natural gas futures tumbled $0.01, or 0.45%, to $2.225 per British thermal units (btu) at 16:21 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices are on track for a steep weekly decline of 5%, adding to their year-to-date losses of 23%.

According to the US Energy Information Administration (EIA), domestic stockpiles of natural gas climbed by 98 billion cubic feet for the week ending October 4, which meets the median estimate of 97 billion cubic feet. In total, inventories stand at 3.415 trillion cubic feet, up 472 billion cubic feet from the same time a year ago. They are also nine billion below the five-year average.

The global natural gas market will significantly grow for the next six years, says a new report. published a study, titled “Natural Gas – Market Analysis, Trends, and Forecasts,” in which it projected that the global natural gas market will grow by 1.3 trillion cubic meters, or 4.4%, with the US accounting for the most growth.

Europe will play an important part in the natural gas market, specifically Germany as it is forecast to add more than 45 billion cubic meters to the region’s size over the next half-decade. China, researchers say, could grow as much as 6.5% and add more than 357 billion cubic meters.

It makes sense in the US since proven natural gas reserves have soared 85% in the last 10 years to 450 trillion cubic feet. Just last week, the US Geological Survey (USGS) announced that the Marcellus Sahel and Point Pleasant-Utica Shale formations of the Appalachian Basin could contain approximately 214 trillion cubic feet in undiscovered and technically recoverable natural gas.

USGS Director Jim Reilly said in a statement last week:

Watching our estimates for the Marcellus rise from 2 trillion, to 84 trillion, to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have.

In other energy markets, December West Texas Intermediate (WTI) crude oil futures advanced $0.79, or 1.5%, to $53.38 per barrel. January Brent crude futures tacked on $0.52, or 0.89%, to $58.84 a barrel. December gasoline futures edged up $0.014, or 0.88%, to $1.60 per gallon. December heating oil futures shed $0.005, or 0.3%, to $1.91 a gallon.

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