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Natural Gas Flat on Massive Domestic Supply Increase, Trade Woes

August 9, 2018 at 17:53 by Andrew Moran

Natural gas futures are trading flat on Thursday after the US government reported an immense increase in domestic inventories of natural gas. The energy commodity may find support as natural gas is starting to get gradually involved in the trade spat between the US, China, and the European Union (EU).

September natural gas futures dipped $0.003, or 0.1%, to $2.946 per million British thermal units at 17:31 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices have had a strong start to August, advancing by 5% over the last five trading sessions.

Year-to-date, natural gas is up 6%.

According to the US Energy Information Administration (EIA), domestic stockpiles of natural gas jumped by 46 billion cubic feet for the week ending August 3. The EIA reported that stockpiles now total 2.354 trillion cubic feet, which is 671 billion cubic feet from the same time a year ago. It is also 572 billion cubic feet below the five-year average.

Despite the lack of direction on Thursday, natural gas prices will likely trade higher in the coming weeks as global supplies may come into question amid tense international trade negotiations.

The EU is requesting that the US slash red tape and simplify rules to allow the export of liquefied natural gas (LNG) should the White House wish the 28-nation trade block purchase more. The EU is also urging Washington construct more terminals to import US LNG, which officials say could reduce the region’s dependency on Russia.

Senior US and EU officials will gather in Washington on August 20 to discuss the matter.

Meanwhile, additional US liquefied natural gas initiatives are stuck in limbo after China threatened to slap a 25% tariff on all US natural gas, something that could make financing for future projects a bit more complicated. It is believed that the world’s second-largest economy is attempting to target President Donald Trump’s energy dominance efforts in order to get his administration to return to talks and make some concessions of their own.

In other energy commodities, September West Texas Intermediate (WTI) crude oil futures tumbled $0.12, or 0.18%, to $66.82 per barrel. October Brent crude futures slipped $0.24, or 0.33%, to $72.04 a barrel. September gasoline futures shed $0.02, or 1.13%, to $1.99 per gallon. September heating oil futures were flat at $2.11 a gallon.

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