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Natural Gas Falls As Much As 2% on First Weekly Jump in Inventories

May 3, 2018 at 16:47 by Andrew Moran

Natural gas futures are trading in the red on a new US government report that found domestic supplies increased for the first time this season. This is a season when inventories typically swell ahead of the anticipated jump in summer cooling demand.

June natural gas futures shed $0.041, or 1.49%, to $2.713 per British thermal units at 16:19 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices tumbled as much as 2% before paring those losses. Year-to-date, natural gas has slipped nearly 2%.

According to the US Energy Information Administration (EIA), US natural gas stockpiles climbed by 62 billion cubic feet for the week ending April 27, which is more than the 49 billion cubic feet the market had projected. Natural gas supplies now total 1.343 trillion cubic feet, down 903 billion cubic feet from the same time a year ago, and 534 billion under the five-year average.

Last week, the World Bank published its April Commodity Markets Outlook and forecast that commodities like natural gas and oil could soar by as much as 20% this year. The estimate was revised from 16% in October.

Bloomberg is reporting that Great Britain is consuming more natural gas because of frigid temperatures. Over the last month, UK exports have plunged to their lowest levels in a decade for this time of the year. Rather than demand subsiding from warmer weather, cooler temperatures are boosting demand and supporting prices in the region.

Johana Typoltova, a European gas analyst at Bloomberg New Energy Finance, said:

The flows are driven almost entirely by the NBP-TTF spread, and the spread is high at the moment. We see 35 million cubic meters a day lost from available gas for exports to the continent.

In other energy markets, there is a sea of red. June West Texas Intermediate (WTI) crude futures are down $0.19, or 0.28%, to $67.73 per barrel. July Brent crude futures dipped $0.10, or 0.14%, to $73.26 a barrel. June gasoline futures slid $0.006, or 0.29%, to $2.074 per gallon. June heating oil futures dropped $0.01, or 0.50%, to $2.111 per gallon.

On Wednesday, the EIA reported that domestic crude stockpiles surged 6.2 million barrels, while US output hit a new record of 10.62 million barrels per day (bpd).

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