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Natural Gas Pares Early Losses on Smaller-Than-Expected Jump in Supplies

August 23, 2018 at 15:10 by Andrew Moran

Natural gas futures have pared their early losses after the US government reported a smaller-than-expected increase in domestic supplies. Natural gas prices are looking to add to their recent gains and record an impressive weekly jump.

September natural gas futures rose $0.006, or 0.20%, to $2.962 per million British thermal units (btu) at 15:48 GMT on Thursday on the New York Mercantile Exchange. Natural gas has surged nearly 2% over the last five trading sessions, adding to its year-to-date surge of nearly 7%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas climbed by 48 billion cubic feet for the week ending August 17, which is less than the market forecast of 55 billion cubic feet. US natural gas stockpiles now total 2.435 trillion cubic feet, down 684 billion cubic feet from the same time a year ago. They are also 599 billion below the five-year average.

Earlier this week, S&P Global Platts reported that US natural gas production hit an all-time high.

From Platts Analytics:

US dry gas production fell 500 MMcf/d day on day to 82.2 Bcf/d Monday, after reaching an all-time high of 82.7 Bcf/d on Sunday, according to S&P Global Platts Analytics data.

Northeast production continued its strength over the weekend, setting a new all-time high of 29.1 Bcf/d at the end of last week while exceeding the 29-Bcf/d threshold for four of the past six days, according to Platts Analytics.

Texas output levels also touched a YTD high of 20 Bcf/d.

Analysts forecast that natural gas prices could finally top $3 in the coming weeks amid a ballooning storage deficit. The $3 mark has acted as a price ceiling for the market since October 2017.

In other energy commodities, September West Texas Intermediate (WTI) crude oil futures tacked on $0.34, or 0.5%, to $68.09 per barrel. September Brent crude futures shed $0.29, or 0.4%, to $72.61 a barrel. September gasoline futures slipped $0.013, or 0.67%, to $2.054 per gallon. September heating oil futures were flat at $2.17 a gallon.

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