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Natural Gas Rallies 4% Despite Weekly Stock Surge, New Supplies

October 3, 2019 at 18:30 by Andrew Moran

Natural gas futures are rallying as much as 4% on Thursday after the US government reported that domestic supplies rose more than expected. The energy commodity is also surging even after scientists uncovered shale formations in the eastern United States that contain tens of trillions of cubic feet of natural gas, potentially adding to global supplies.

November natural gas futures spiked $0.095, or 4.19%, to $2.34 per million British thermal units (btu) at 18:12 GMT on Thursday on the New York Mercantile Exchange. Natural gas has had a rough month, declining 4% and adding to its year-to-date losses of nearly 19%. It is on track for a steep weekly decline of nearly 5%.

According to the US Energy Information Administration (EIA), domestic inventories soared 112 billion cubic feet for the week ending September 27. This is a little bit higher than the median estimate of 109 billion cubic feet. In total, supplies stand at 3.317 trillion cubic feet, up 465 billion cubic feet from the same time a year ago. They are also 18 billion below the five-year average.

The US Geological Survey (USGS) announced that the Marcellus Sahel and Point Pleasant-Utica Shale formations of the Appalachian Basin, which borders Pennsylvania, New Jersey, and Ohio, is estimated to contain about 214 trillion cubic feet of undiscovered and technically recoverable natural gas.

USGS Director Jim Reilly said in a statement:

Watching our estimates for the Marcellus rise from 2 trillion to 84 trillion to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have. Knowing where these resources are located and how much exists is crucial to ensuring our nation’s energy independence.

Meanwhile, in industry news, Russian Energy Minister Alexander Novak said that the US weaponizes its liquefied natural gas (LNG) to negatively influence Moscow’s economic relations in Western Europe. Speaking in Moscow on Wednesday, Novak alleged that Washington is not allowing market competition in the energy sector. He also slammed the US government thinking about sanctions on businesses and individuals involved in Nord Stream 2, a pipeline that links Russia to Germany through the Baltic Sea.

Israel confirmed that it will significantly ramp up natural gas exports to Egypt under a historic agreement. The deal will consist of about 60 billion cubic meters (bcm) of natural gas over 15 years. The deal is estimated to be valued at about $19.5 billion.

In other energy markets, November West Texas Intermediate (WTI) crude oil futures dipped $0.25, or 0.47%, to $52.39 a barrel. December Brent crude futures edged up $0.05, or 0.09%, to $57.75 per barrel. November gasoline futures rose $0.01, or 0.7%, to $1.55 per gallon. November heating oil futures were unchanged at $1.87 a gallon.

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