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Natural Gas Flat on Modest Decline in US Inventories

March 21, 2019 at 15:40 by Andrew Moran

Natural gas futures are trading sideways on Thursday after the US government reported a modest decline in domestic supplies. The latest industry data also suggests that US exports have hit a new all-time high as output and demand levels continue to soar.

April natural gas futures dipped $0.001, or 0.04%, to $2.819 per million British thermal units (btu) at 15:01 GMT on Thursday on the New York Mercantile Exchange. Natural gas is on track for a weekly loss of around 1%, lowering its year-to-date gains to a little more than 4%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas declined by 47 billion cubic feet for the week ending March 15, which is in line with what the market had anticipated. In total, US supplies stand at 1.143 trillion cubic feet, down 315 billion cubic feet from the same time a year ago and 556 billion below the five-year average.

The US natural gas industry continues to be booming as companies are producing and selling more.

New data found that Liquid Natural Gas (LNG) exports are soaring to record highs. So far this year, the US has averaged 5.8 billion cubic feet per day (bcf/d) in exports, and the latest EIA forecasts exports could top 9 bcf/d by the end of 2019.

But some analysts are sounding the alarm about energy firms pulling back production, evident in the recent capital expenditure (capex) budgets for 2019. With the oil and gas industry facing a collective $240 billion in debt that is set to mature within the next five years, companies might not have the appetite to maintain current levels. At the same time, the EIA reported in January that these firms have reduced their debt for eight consecutive quarters.

Meanwhile, the Brazilian government recently announced that it plans to overhaul its natural gas sector by June. The Mines and Energy Ministry wants to slash energy costs in the country as these prices have climbed on average 3%, beating economists’ estimates.

In other energy commodities, May West Texas Intermediate (WTI) crude oil futures edged up $0.04, or 0.07%, to $60.27 per barrel. May Brent crude futures slipped $0.20, or 0.29%, to $68.30 a barrel. May gasoline futures were flat at $1.90 a gallon. May heating oil futures shed $0.01, or 0.51%, to $2.00 per gallon.

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