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Natural Gas Rises on Smaller-Than-Expected Supply Decrease

February 28, 2019 at 16:31 by Andrew Moran

Natural gas futures are trading higher on Thursday after the US government reported a smaller-than-expected decline in domestic inventories of the energy supply. The industry has been buzzing on reports that Saudi Arabia aims to become the biggest natural gas exporter in the world, attempting to unseat the US and Russia.

April natural gas futures edged up $0.01, or 0.36%, to $2.81 per million British thermal units (btu) at 15:06 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices are on track for a weekly gain of more than 3%, bringing its year-to-date boost to 4.2%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas declined 166 billion cubic feet for the week ending February 22, which was lower than the median estimate of 171 billion cubic feet. In total, stockpiles stand at 1.539 trillion cubic feet, down 154 billion cubic feet from the same time a year ago and 424 billion below the five-year average.

Speaking at an event in Dubai recently, Saudi Arabian officials announced that it intends to export as much as three billion cubic feet of natural gas per day by 2030. Saudi Aramco, the nation’s largest oil firm, wants to develop conventional and unconventional gas reserves, and construct pipelines to ship liquefied natural gas (LNG).

The oil company plans to spend as much as $150 billion over the next decade to boost its natural gas capabilities.

Meanwhile, Exxon Mobil confirmed this week that it has discovered the world’s third largest natural gas reserve in two years just off the coast of Cyprus. According to preliminary estimates, the gas corporation may have stumbled upon as much as eight trillion cubic feet, or 227 billion cubic meters. Exxon is expected to publish the official numbers by the summer.

Steve Greenlee, president of Exxon Mobil Exploration, said in a statement:

These are encouraging results in a frontier exploration are. The potential for this newly discovered resource to serve as an energy source for regional and global markets will be evaluated further.

The Cyprus government is pleased by the news as Energy Minister George Lakkotropis celebrated the announcement.

It is an amazing development for all of Cyprus. This is the greatest discovery within our Exclusive Economic Zone (EEZ). In the coming months, the amount of natural gas will be more accurately estimated.

This comes less than two years after Exxon, as well as Qatar Petroleum, won the rights to explore for oil and gas in offshore areas of Cyprus.

In other energy commodities, April West Texas Intermediate (WTI) crude oil futures tacked on $0.12, or 0.21%, to $57.06 per barrel. April Brent crude futures shed $0.40, or 0.6%, to $65.99 a barrel. April gasoline futures dipped $0.01, or 0.55%, to $1.75 a gallon. April heating oil futures were flat at $2.02 per gallon.

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