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Natural Gas Rallies on Smaller-Than-Expected Jump in US Supplies

August 2, 2018 at 15:17 by Andrew Moran

Natural gas futures are rallying on Thursday after the US government reported a smaller-than-expected jump in domestic stockpiles. Natural gas is looking to rebound in August after enduring a sluggish July.

September natural gas futures rose $0.04, or 1.4%, to $2.80 per million British thermal units at 15:54 GMT on Thursday on the New York Mercantile Exchange. Year-to-date, natural gas prices have been trading sideways, advancing a tepid 0.6%.

According to the US Energy Information Administration (EIA), domestic stockpiles of natural gas climbed by 35 billion cubic feet for the week ending July 27, which is lower than the initial market forecast of 45 billion cubic feet. Natural gas inventories now total 2.308 trillion cubic feet, down 688 billion cubic feet from the same time a year ago. They are also 565 billion below the five-year average.

On Tuesday, the EIA reported that US dry natural gas output increased year over year in May for the 12th straight month. The average daily rate of dry natural gas production in May was the highest it has ever been since the EIA began to track monthly production in 1973.

The preliminary level for dry natural gas production in May 2018 was 2,491 billion cubic feet (Bcf), or 80.4 Bcf/day. This level was 8.6 Bcf/day (12.0%) higher than the May 2017 level of 71.8 Bcf/day.

In addition to the EIA report, investors are looking at the latest weather data that suggests cooler trends could impact the US Northeast and Midwest throughout the middle of August, a boon for natural gas prices.

It was also reported on Thursday that the amount of domestic natural gas traded increased in 2017 for the third consecutive year, touching its highest level in seven years.

In other energy markets, September West Texas Intermediate (WTI) crude oil futures surged $0.69, or 1.02%, to $68.35 per barrel. October Brent crude futures rose $0.34, or 0.47%, to $72.73 a barrel. September gasoline futures were flat at $2.042 a gallon. September heating oil futures edged up $0.012, or 0.61%, to $2.11 per gallon.

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