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Natural Gas Rebounds After Posting Biggest One-Day Drop Since 2003

November 16, 2018 at 17:06 by Andrew Moran

Natural gas futures are rebounding at the end of the trading week after suffering the largest one-day percentage decline in 15 years. Natural gas prices are rallying on Friday, despite the US government reporting that weekly inventories rose as the market projected. But it seems weather is playing a bigger factor for the natural gas market than data.

December natural gas futures rose $0.153, or 3.79%, to $4.188 per million British thermal units (btu) at 15:21 GMT on Friday on the New York Mercantile Exchange. On Thursday, natural gas prices crashed more than 16%, the biggest single-session percentage decrease since February 2003. Even with the one-day crater, natural gas is still poised for a weekly gain of 12%, bringing its year-to-date advance to 40%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas climbed by 39 billion cubic feet for the week ending November 9. This is in line with the market estimates of 38 billion cubic feet. In total, natural gas stockpiles stand at 3.247 trillion cubic feet, which is down 528 billion cubic feet from the same time a year ago. They are also 601 billion below the five-year average.

Experts believe that volatility will remain the norm throughout the winter because storage is expected to be low amid a colder-than-normal season. Some parts of the US are already experiencing Old Man Winter with the first major snow storm hitting the East Coast – and it is not even winter yet.

In recent weeks, several weather organizations have forecast a brutal winter, particularly when it comes to the bitter cold. Like last year, this could be a boon for natural gas because more households will require heating for their homes.

In other energy markets, January gasoline futures edged up $0.023, or 1.54%, to $1.57 per gallon. January heating oil futures jumped $0.0025, or 0.12%, to $2.069 a gallon.

Crude oil prices are rallying to finish off the trading week. This week, the EIA reported that domestic supplies surged 10.3 million barrels, while US output advanced 100,000 barrels per day (bpd) to 11.7 million bpd. Gasoline stockpiles dropped by 1.4 million barrels, while distillate inventories fell 3.6 million barrels.

January West Texas Intermediate (WTI) crude futures tacked on $0.24, or 0.42%, to $56.91 per barrel. January Brent crude futures edged up $0.26, or 0.36%, to $66.85 a barrel.

If you have any questions and comments on commodities today, use the form below to reply.

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