Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Natural Gas Futures Fall 1% as US Supplies Rise

May 9, 2019 at 15:27 by Andrew Moran

Natural gas futures plunged as much as 1% on Thursday after the US government reported an increase in domestic inventories of the energy supply. The losses were capped on a recent forecast that Chinese demand for natural gas will keep rising over the next four years.

June natural gas futures tumbled $0.02, or 0.84%, to $2.59 per million British thermal units (btu) at 14:49 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices fell more than 1% before paring some of those losses. Natural gas has been flat this week, and it is still down about 5% year-to-date.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas climbed by 85 billion cubic feet for the week ending May 3. This is in line with what the market had penciled in. In total, US stockpiles stand at 1.547 trillion cubic feet, up 128 billion from the same time a year ago. But they are 303 billion below the five-year average.

In industry news, China is expected to be one of the biggest markets for natural gas, says a new report from ResearchAndMarkets.

Analysts note that the demand for natural gas in China has been steadily growing, which has been facilitated by two important factors: The country’s supportive policies on natural gas imports and the progress in the construction of liquid natural gas (LNG) terminals and natural gas pipelines. While Beijing has attempted to foster an environment of natural gas production, the domestic supply is weak, forcing the country to rely on imports to make the transition.

As natural gas is environmentally friendly and easy to transport and use, the demand for natural gas in China is expected to keep rising from 2019 to 2023. As the growth rate of the production volume is far lower than that of the demand, the import volume of natural gas in China will keep growing from 2019 to 2023.

Meanwhile, the short-term price movement is not expected to surge anytime soon because of the mid weather affecting much of the US. The weather models do show, however, that moderate-to-warm weather could hit the central and eastern US by the end of May or beginning of June.

In other energy markets, June West Texas Intermediate (WTI) crude oil futures plunged $0.91, or 1.46%, to $61.23 per barrel. June Brent crude futures slipped $0.64, or 0.91%, to $69.73 a barrel. June gasoline futures fell $0.01, or 0.7%, to $1.96 per gallon. June heating oil futures plummeted $0.02, or 1.14%, to $2.03 a gallon.

If you have any questions and comments on commodities today, use the form below to reply.

Leave a Reply