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Natural Gas Prices Dip As EIA Reports Increase in Domestic Inventories

July 12, 2018 at 15:53 by Andrew Moran

Natural gas futures are tumbling on Thursday after the US government reported a lower-than-expected increase in domestic supplies. Natural gas, continuing its month-long decline, is on track for a 1% weekly loss, leaving its year-to-date performance relatively flat.

August natural gas futures slipped $0.027, or 0.95%, to $2.802 per million British thermal units (btu) at 15:22 GMT on Thursday on the New York Mercantile Exchange.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas advanced by 51 billion cubic feet for the week ending July 6, which is lower than the market forecast of 60 billion cubic feet. Natural gas stockpiles now total 2.203 trillion cubic feet, down 725 billion cubic feet from the same time a year ago. They are 519 billion below the five-year average.

The EIA also released its monthly report, the Short-Term Energy Outlook (STEO), which estimates that natural gas will continue to take more from coal’s share of the US energy market until 2020. As the country and the rest of the world transition away from coal, natural gas is expected to set a record contribution to overall domestic energy production.

In other energy markets towards the end of the trading week, August gasoline futures shed $0.0115, or 0.56%, to $2.0499 per gallon. August heating oil futures tumbled $0.02, or 0.95%, to $2.0816 a gallon.

On Wednesday, the EIA reported that US crude supplies decreased by 12.6 million barrels for the week ending July, while domestic output hit 10.8 million bpd. Gasoline inventories decreased by 700,000 barrels, while distillate supplies spiked 4.1 million barrels.

The EIA further projected that the US will become the world’s leading producer of crude oil, averaging 11.8 million bpd in 2019. This means the US will surpass Russia and Saudi Arabia within the next two years.

September West Texas Intermediate (WTI) crude futures slid $0.23, or 0.33%, to $68.63 a barrel. September Brent crude futures rose $0.16, or 0.22%, to $73.56 per barrel.

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