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Natural Gas Fails to Carry Momentum From EIA Report

February 22, 2019 at 16:33 by Andrew Moran

Natural gas futures are trading sideways at the end of the holiday-shortened trading week, unable to carry the momentum from the US government’s Thursday inventory report. Investors are also paying attention to the winter weather, which was supposed to dissipate according to various forecasts. Many parts of the US could only wish that were the case.

March natural gas futures dipped $0.001, or 0.04%, to $2.696 per million British thermal units (btu) at 14:57 GMT on Friday on the New York Mercantile Exchange. Natural gas prices are on track for a weekly advance of 2.39%, lowering its year-to-date losses to 6%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas declined by 177 billion cubic feet for the week ending February 15. This was higher than median estimates of 165 billion cubic feet. In total, US supplies stand at 1.705 trillion cubic feet, down 73 billion cubic feet from the same time a year ago. They are also 362 billion below the five-year average.

Immune from the geopolitical tensions for the past year, it finally looks as if the US natural gas industry could take a hit should the US-China trade war continue. Despite Beijing slapping tariffs on US liquefied natural gas (LNG), prices have weathered the storm, taking their cues mostly from weather trends. That said, the lingering trade spat has prompted the second-largest economy to slash purchases of US LNG, leading to a halt on new American export terminals that could cost billions in investments.

Ultimately, the sector warns that the trade war could affect other projects in the industry.

Right now, China is the fastest-growing LNG market and the US is the fastest-growing supplier.

Although weather projections have suggested that Old Man Winter is going to make his premature exit, the latest temperatures contradict these reports. Ostensibly, low temperatures are, for the most part, sticking around, which is a boon for natural gas since it increases demand and winds down storage levels.

Will natural gas prices top $3 again? Energy professionals are not optimistic that it could happen for the first time in a month – a lot of the energy bets are being placed on crude oil futures.

In other energy commodities, April West Texas Intermediate (WTI) crude futures rose $0.56, or 0.98%, to $57.52 per barrel. April Brent crude futures climbed $0.19, or 0.28%, to $67.25 a barrel. April gasoline futures were flat at $1.765 per gallon. April heating oil futures were unchanged at $2.03 a gallon.

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