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Natural Gas Plummets Despite Weekly Drop in US Supplies

March 28, 2019 at 18:10 by Andrew Moran

Natural gas futures are trading lower on Thursday after the US government reported a decline in domestic inventories, matching market forecasts. With warmer temperatures prevalent across North America and India surprisingly taking up global market share, natural gas prices have cratered this past week, bringing the energy commodity into the red on the year.

April natural gas futures tumbled $0.05, or 1.8%, to $2.69 per million British thermal units (btu) on Thursday on the New York Mercantile Exchange. Natural gas is on track for a weekly decline of about 5%, and it is down 0.1% year-to-date.

According to the US Energy Information Administration (EIA), domestic natural gas inventories declined by 36 billion cubic feet for the week ending March 22. This matches the median estimates of 33 billion cubic feet. In total, supplies stand at 1.107 trillion cubic feet, down 285 billion cubic feet from the same time a year ago. They are also 551 billion below the five-year average.

In the US and Canada, daytime temperatures have been rising, but overnight temperatures may result in a greater demand for natural gas to heat their homes. There was plenty of speculation before the arrival of spring that Old Man Winter would overstay his welcome and wreak havoc on many parts of the northeast region But, aside from random winter weather lingering in the background, temperatures are warming up.

Meanwhile, India has seen its natural gas production surge to a three-year high, climbing 2.9% in February. Energy output last year grew by a tepid 0.64% per month after hitting a nine-year low in the beginning of 2018. The increase in production is being attributed to greater investments from Oil and Natural Gas Corp (ONGC), the state-run energy explorer.

Overall, natural gas appears to be one of the most popular forms of energy on the planet today. In the US, consumption surged 10% to 82.1 billion cubic feet in 2019, reports the Department of Energy.

In other energy commodities, May West Texas Intermediate (WTI) crude oil futures fell $0.24, or 0.4%, to $59.20 per barrel. May Brent crude oil futures slipped $0.21, or 0.31%, to $67.62 a barrel. May gasoline futures dipped $0.12, or 0.64%, to $1.86 a gallon. May heating oil futures slid $0.014, 0.71%, to $1.96 per gallon.

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