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Natural Gas Jumps on EIA Report, Revised Weekly Data

June 28, 2018 at 15:12 by Andrew Moran

Natural gas futures are rallying on Thursday after the US government released its latest weekly energy report. The natural gas market has been paying attention to new reports that China is attempting to be a major player in the industry, even though the US will have a “century of supply” as part of the shale revolution.

August natural gas futures rose $0.02, or 0.80%, to $3.00 per million British thermal units (btu) on Thursday on the New York Mercantile Exchange. Natural gas prices have advanced more than 1% in June and are on track for a modest weekly gain. Year-to-date, the energy commodity has surged 7%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas climbed by 66 billion cubic feet for the week ending June 22. This is less than the initial market forecast of 74 billion cubic feet. The EIA also included a revision to the previous week’s report, raising it from 91 billion to 95 billion cubic feet.

In total, natural gas stockpiles stand at 2.074 trillion cubic feet, down 735 billion cubic feet from the same time a year ago, and 501 billion below the five-year average.

The natural gas sector has been paying close attention to domestic output and China’s rise to natural gas dominance.

Speaking at the triennial World Gas Conference in Washington this week, industry executives and government officials prognosticated that there will be a “century of supply” stemming from the shale revolution. To this date, the natural gas market has not endured the pain from the brewing trade war between the US and China, but there are still concerns that America’s energy endeavors might be threatened.

That said, the US still produces roughly 72 billion cubic feet (bcf) every day, which is projected to increase by seven bcf per day for the remainder of the year. Last week, IHS Markit estimated that US shale gas output will surge 60% within the next 20 years.

Ryan Lance, chief executive of US shale producer ConocoPhillips, told the audience:

We see a century of natural gas supply in US shale. Shale’s abundance is real and it [is] not going away.

Rick Perry, US Secretary of Energy and former Texas Governor, stated that the nation’s “energy dominance” is helping the US “share our energy value with the world.”

But is this a case of not so fast?

Not only is Russia a major exporter of natural gas, the world’s second-largest economy is rising to the top.

There have been reports in recent weeks that China is gradually boosting its natural gas production levels. By 2020, China is expected to double its natural gas output and contribute about 15% of global production. Buoyed by its technological capabilities and investments in renewable energy, China could become a major player in international markets over the next decade, something that could create a global supply glut.

In other energy markets, August gasoline futures jumped $0.01, or 0.49%, to $2.12 per gallon. August heating oil futures rose $0.01, or 0.36%, to $2.19 a gallon.

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