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Natural Gas Rises 1% Despite Unexpected Supply Build

November 13, 2020 at 16:14 by Andrew Moran

Natural gas futures are rising more than 1% to close out the trading week, despite the US government reporting a surprising increase in domestic inventories. Natural gas prices have had a roller coaster of a week, but they are on track to record a weekly gain amid potentially damaging weather events in the Gulf of Mexico.

January natural gas futures advanced $0.044, or 1.42%, to $3.138 per million British thermal units (btu) at 14:54 GMT on Thursday on the New York Mercantile Exchange. The energy commodity will settle the week with a 3% surge, adding to its year-to-date rally of 43%.

According to the US Energy Information Administration (EIA), domestic stockpiles of natural gas rose by eight billion cubic feet for the week ending November 6. The market had anticipated a decrease of four billion cubic feet. In total, inventories stand at 3.927 trillion cubic feet, up 196 billion cubic feet a year ago. They are also 176 billion cubic feet above the five-year average.

The weekly natural gas report was published a day later due to the Veterans Day holiday on Wednesday.

The energy market is monitoring the two weather events transpiring near the Gulf of Mexico. Hurricane Eta is set to make landfall on the western part of Florida, while a tropical cyclone is intensifying in the Caribbean. It remains unclear if it will have an impact on oil and gas production in the region, but officials from the National Oceanic Atmospheric Administration (NOAA) forecast that they will contribute to higher-than-average temperatures for the next two weeks.

It is the temperature that could have a greater impact on natural gas prices this month. If temperatures are warmer, it would affect US demand. Before the weather events, many weather models had pointed to cooler temperatures in parts of the US, a development that would be bullish for the so-called bridge fuel since it would boost demand.

In other energy commodities, December West Texas Intermediate (WTI) crude oil futures fell $0.84, or 2.04%, to $40.28 per barrel. January Brent crude futures shed $0.72, or 1.65%, to $42.81 a barrel. December gasoline futures tumbled $0.0373, or 3.22%, to $1.1198 a gallon. December heating oil futures dropped $0.0297, or 2.41%, to $1.2036 per gallon.

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