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Natural Gas Futures Slide as Domestic Supplies Drop

April 19, 2018 at 16:03 by Andrew Moran

Natural gas futures are trading lower after a new US government report showed US stockpiles of natural gas declined more than expected. Natural gas has tried to pare its losses, but it is likely it will settle lower.

May natural gas futures tumbled $0.036, or 1.31%, to $2.703 per British thermal units (btu) at 15:36 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices have rallied so far this month, climbing nearly 2%. Year-to-date, natural gas is down about 1%.

According to the US Energy Information Administration, domestic supplies of natural gas decreased by 36 billion cubic feet for the week ending April 13, which is more than expected. Analysts had initially anticipated a drop of 25 billion cubic feet. Total stocks now stand at 1.299 trillion cubic feet, down 808 billion cubic feet from the same time a year ago, and 449 billion below the five-year average.

Traders are paying attention to a new report that China will double its natural gas output from shale basins over the next two years. This suggests that the world’s second-largest economy is getting better at fracking as the nation’s oil firms develop new technologies and techniques to grab natural gas from shale rock formations. But analysts are warning that Chinese production capabilities would still be a drop in the bucket compared to the US shale revolution.

In other energy markets on Thursday, June gasoline futures rose $0.021, or 1.03%, to $2.095 per gallon. June heating oil futures climbed $0.032, or 1.54%, to $2.12 a gallon.

US oil is aiming at $70 towards the end of the trading week. June West Texas Intermediate (WTI) crude futures rallied $0.68, or 0.99%, to $69.12 per barrel. June Brent crude futures advanced $1.10, or 1.47%, to $74.56 a barrel.

On Wednesday, the EIA reported that domestic crude stockpiles slid by 1.1 million barrels, while US output rose 15,000 barrels per day (bpd) to 10.54 million bpd. Gasoline stockpiles fell by three million barrels, while distillate inventories decreased 3.1 million barrels.

The EIA also forecast that domestic shale production levels could rise 125,000 bpd next month.

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