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Natural Gas Plunges 2% After Big Increase in US Inventories

June 13, 2019 at 16:04 by Andrew Moran

Natural gas futures fell as much as 2% on Thursday after the US government reported a smaller-than-expected decline in domestic inventories. Natural gas prices had been trading in positive territory this week up until the report came out, but now they have returned to their normal 2019 trends.

July natural gas futures tumbled $0.045, or 1.85%, to $2.34 per million British thermal units (btu) at 15:43 GMT on Thursday on the New York Mercantile Exchange. So far this week, natural gas is up just under 0.5%, but prices are still down more than 18% year-to-date.

According to the US Energy Information Administration (EIA), domestic stockpiles of natural gas climbed by 102 billion cubic feet for the week ending June 7. This is lower than the median estimate of 108 billion cubic feet. In total, inventories stand at 2.088 trillion cubic feet, up 189 billion cubic feet from the same time a year ago. They are also 230 billion below the five-year average.

Bulls have potentially turned into bears on the latest bout of moderate temperatures. This spring, temperatures have been below normal in much of the country, except for western and Gulf Coast areas. The weather forecasts show that this will likely be the norm for the next several weeks.

Should these trends persist, then it would lead to poor cooling demand. When robust production is factored in, analysts anticipate inventories will continually spike every week until temperatures heat up.

In industry news, Jerry Jones, the owner of the Dallas Cowboys NFL franchise, is betting on natural gas.

Comstock Resources, an independent energy company, recently acquired Covey Park Energy for $2.2 billion. Jones invested just under $500 million in the deal, suggesting that he is betting big on the nation’s most important global commodity right now.

I believe in natural gas in a big way, I don’t know of any individuals…that have put the kind of money out as I’ve put in this thing. I am excited to provide the funding and to team up with Denham Capital to combine the two companies to create the basin leader in the Haynesville shale. This combination is another step toward completing my vision to create an industry leading natural gas company.

While many on Wall Street have given up on natural gas, Jones thinks the recent trends will reverse.

In other energy markets, July West Texas Intermediate (WTI) crude oil futures surged $1.45, or 2.84%, to $52.59 per barrel. August Brent crude futures tacked on $1.50, or 2.50%, to $61.47 a barrel. July gasoline futures rose $0.027, or 1.60%, to $1.71 a gallon. July heating oil futures jumped $0.026, or 1.46%, to $1.80 per gallon.

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