Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Natural Gas Edges Up on Smaller-Than-Expect Weekly Supply Jump

September 12, 2019 at 17:36 by Andrew Moran

Natural gas futures are trading slightly higher on Thursday after the US government reported a smaller-than-expected increase in weekly inventories. The energy commodity has had an interesting summer, recording double-digit growth since June. But analysts are still anticipating natural gas prices to remain low as output continues to be high.

October natural gas futures rose $0.015, or 0.54%, to $2.565 per million British thermal units (btu) at 17:16 GMT on Thursday on the New York Mercantile Exchange. Natural gas is poised for a stellar weekly gain of about 4%, paring its year-to-date loss to 11%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas surged by 78 billion cubic feet for the week ending September, which is lower than the market forecast of 87 billion cubic feet. In total, stockpiles stand at 3.019 trillion cubic feet, up 393 billion cubic feet from the same time a year ago. They are 77 billion below the five-year average.

This comes as IHS Markit published a new report that suggests the global supply glut will push the average price of natural gas below $2 per million btu next year, despite strong domestic demand. This would be the lowest average price in real terms since the 1970s and the lowest in nominal terms since 1995.

Sam Andrus, executive director of IHS Markit who covers North American gas markets, says that it is a case of being “too much too fast.”

Drillers are now able to increase supply faster than domestic or global markets can consume it. Before market forces can correct the imbalance, here comes a fresh surge of supply from somewhere else.

Nearly all the growth in US natural gas demand over the next few years will come from LNG exported to other countries. The added supply from the Permian will match—if not exceed—those volumes.

Research firm S&P Global Platts Analytics reported similar prognostications as analysts expect an 8% decline through 2024.

In other energy markets, October West Texas Intermediate (WTI) crude oil futures tumbled $0.63, or 1.11%, to $55.14 per barrel. November Brent crude futures slumped $0.56, or 0.92%, to $60.25 a barrel. October gasoline futures fell $0.02, or 1.27%, to $1.55 per gallon. October heating oil futures slipped $0.02, or 1.05%, to $1.88 a gallon.

If you have any questions and comments on commodities today, use the form below to reply.

Leave a Reply