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Natural Gas Rallies on Weekly Increase in Domestic Supplies

May 17, 2018 at 15:33 by Andrew Moran

Natural gas futures are rallying on Thursday after the US government reported that domestic stockpiles rose more than expected. If natural gas prices continue to add gains, then they could be on track for a weekly increase.

June natural gas futures rallied $0.015, or 0.53%, to $2.83 per British thermal units (btu) at 15:09 GMT on Thursday on the New York Mercantile Exchange. Year-to-date, natural gas is in positive territory, climbing nearly 2%.

According to the US Energy Information Administration (EIA), US natural gas inventories jumped 106 billion cubic feet for the week ending May 11, which is more than the market forecast of 104 billion cubic feet. This means total supplies now stand at 1.538 trillion cubic feet, down 821 billion cubic feet from the same time a year ago, and 501 billion under the five-year average.

Analysts note that the annual storage deficit is projected to shrink for the remainder of May, and they also do not expect the storage deficit to decrease in 2018.

This comes after Goldman Sachs analysts reported that natural gas demand remains the most attractive in the overall energy market. Citing data from the EIA and the International Energy Agency (IEA), Goldman expects demand for natural gas to rise 1.7% per year until 2035, which would be four times faster than oil.

China, the world’s second largest economy, is gradually making the transition to natural gas from several other energy elements in order to clean up its air. Beijing is also aiming to double its natural gas production levels over the next five years, as it attempts to compete with the US and its shale revolution.

In other energy markets, there is green across the board. July West Texas Intermediate (WTI) crude futures ballooned $0.40, or 0.56%, to $71.96 per barrel. July Brent crude futures surged $0.80, or 1.01%, to $80.09 a barrel. July gasoline futures soared $0.018, or 0.82%, to $2.264 per gallon. July heating oil futures advanced $0.026, or 1.17%, to $2.289 a gallon.

On Wednesday, the EIA reported that US crude stockpiles slid 1.4 million barrels, while output levels grew 20,000 barrels per day (bpd) to 10.72 million bpd. Gasoline stockpiles fell 3.8 million barrels, while distillate inventories dropped 92,000 barrels.

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