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Natural Gas Falls on Bigger-Than-Expected Supply Build

September 26, 2019 at 15:18 by Andrew Moran

Natural gas futures are sliding on Thursday after the US government reported a larger-than-expected increase in weekly supplies. Despite the September rally, natural gas prices have been plummeting in recent sessions as output continues to skyrocket. But experts are still bullish on the energy source because global demand is projected to surge over the next 30 years.

November natural gas futures advanced $0.08, or 3.25%, to $2.435 per million British thermal units (btu) at 15:03 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices have slumped nearly 5% in the last week, adding to their year-to-date losses of 15%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas climbed by 102 billion cubic feet for the week ending September 20. This is higher than the median estimate of 93 billion cubic feet. In total, supplies stand at 3.205 trillion cubic feet, up 444 billion cubic feet from the same time a year ago. They are also 47 billion below the five-year average.

In a separate report, the EIA forecast that global natural gas consumption will soar 40% to approximately 200 quadrillion btu by 2050. Writing in its 2019 International Energy Outlook, analysts say that the dramatic increase will be driven by demand growth in non-Organization for Economic Cooperation and Development (OECD) countries’ and their industrial and generation sectors.

The report says that fast-growing renewable energy sources will outpace petroleum as the leading source of primary energy in the next 20 to 30 years. Officials cite public policy changes and lower renewable costs as the main drivers of this shift.

During the projection period, both countries expand industrial sectors as a growing middle class, growing GDPs, increasing natural gas generation and growing populations all cause increasing demand for consumer good.

Meanwhile, in other data, US natural gas pipeline exports to Mexico have hit an all-time high, reaching 5.8 billion cubic feet per day. S&P Global Platts Analytics data found that exports have been gradually rising since May 2019.

In other energy markets, December West Texas Intermediate (WTI) crude oil futures fell $1.00, or 1.77%, to $55.49 per barrel. November Brent crude futures shed $0.88, or 1.43%, to $60.55 a barrel. December gasoline futures dipped $0.01, or 0.63%, to $1.59 per gallon. December heating oil futures tumbled $0.025, or 1.32%, to $1.92 a gallon.

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