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Natural Gas Flat Despite Larger-Than-Expected Weekly Supply Increase

August 30, 2018 at 15:49 by Andrew Moran

Natural gas futures are flat on Thursday, despite a new US government report showing a larger-than-expected increase in weekly inventories. After a strong performance last week, natural gas prices have been lagging this week, poised for a steep loss of around 3%.

October natural gas futures were unchanged at $2.863 per million British thermal units (btu) at 15:27 GMT on Thursday on the New York Mercantile Exchange. So far in 2018, natural gas has advanced 2%, but it has declined 3% since the end of May.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas surged by 70 billion cubic feet for the week ending August 24, higher than the market forecast of 64 billion cubic feet. US natural gas inventories now total 2.505 trillion cubic feet, which is down 646 billion cubic feet from the same time a year ago. They are also 588 billion below the five-year average.

With the unofficial end to summer occurring this weekend, investors will now look ahead to winter.

On Wednesday, the Farmers’ Almanac released its winter 2018–2019 forecast, in which it predicts a “teeth-chattering” and “colder-than-normal” season. The experts say that the middle of the US will endure the most amount of snow, while the Great Lakes and northeastern US will experience above-average snowfall. For the entire nation, the coldest temperatures will take place in the middle of February, and the end of winter is slated to conclude at the end of March.

Editor Peter Geiger said in a statement:

Contrary to the stories storming the web, our time-tested, long-range formula is pointing toward a very long, cold, and snow-filled winter. We stand by our forecast and formula, which accurately predicted the many storms last winter, as well as this summer’s steamy, hot conditions.

Should the winter weather be unbearable, then this would be a boon for natural gas.

In other energy markets, September gasoline futures edged up $0.005, or 0.24%, to $2.11 per gallon. September heating oil futures were relatively unchanged at $2.241 a gallon.

On Wednesday, the EIA reported that US crude oil stockpiles fell 2.6 million barrels, while domestic output topped 11 million barrels per day (bpd). Gasoline stockpiles tumbled 1.6 million barrels, while distillate inventories slipped 800,000 barrels.

September West Texas Intermediate (WTI) crude oil futures tacked on $0.34, or 0.5%, to $68.09 a barrel. September Brent crude futures shed $0.29, or 0.4%, to $72.61 per barrel.

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