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Natural Gas Futures Pare Impressive Gains After EIA Report

June 21, 2018 at 16:47 by Andrew Moran

During the early part of the Thursday trading session, natural gas prices climbed above the crucial $3 threshold. After the US government released its weekly energy report, natural gas futures pared those gains and are now sitting in the red.

July natural gas futures dipped $0.006, or 0.20%, to $2.957 per million British thermal units (btu) at 16:19 GMT on Thursday on the New York Mercantile Exchange. Should natural gas continue to trade in the red, the energy commodity would be on track to record a weekly loss.

Year-to-date, natural gas prices are up more than 5%, with most of their gains occurring since March.

According to the US Energy Information Administration (EIA), domestic natural gas inventories rose by 91 billion cubic feet for the week ending June 15. This is more than the 85 billion cubic feet the market had initially anticipated. Total natural gas stockpiles now stand at 2.004 trillion cubic feet, which is down 757 billion cubic feet from the same time a year ago. They are also down 499 billion below the five-year average.

The latest data comes as an IHS Markit research firm report forecast that US natural gas production will surge 60% during the next two decades. This would equal roughly 118 billion cubic feet of output per day by the end of 2037.

Dan Yergin, IHS Markit vice chairman and report co-author, says the US shale revolution is an understatement.

It represents a dramatic and largely unanticipated turnaround that dramatically changed both markets and long-term thinking about energy. The profound and ongoing impacts on the industry, energy markets, the wider economy, and the US position in the world continue to unfold.

In other energy markets, August gasoline futures tumbled $0.013, or 0.69%, to $1.997 per gallon. August heating oil futures slipped $0.027, or 1.31%, to $2.083 a gallon.

On Wednesday, the EIA reported that US crude oil supplies dropped 5.9 million barrels, while domestic oil output held steady at 10.9 million barrels per day (bpd). Gasoline stockpiles climbed by 3.3 million barrels, while distillate inventories advanced 2.7 million barrels.

August West Texas Intermediate (WTI) crude futures dipped $0.07, or 0.11%, to $65.65 a barrel. August Brent crude futures plunged $1.05, or 1.40%, to $73.69 per barrel.

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