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Natural Gas Sideways After Market-Expected Supply Decline

March 7, 2019 at 16:14 by Andrew Moran

Natural gas futures are trading relatively sideways on Thursday after the US government reported a weekly supply decline that was in line with what the market had anticipated. With the winter coming to an end, some traders are betting that the energy commodity could top $3, and others are retreating from futures contracts.

April natural gas futures were flat at $2.84 per million British thermal units (btu) at 14:48 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices are on track for an admirable weekly gain of more than 1%, bringing their year-to-date increase to 5.2%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas tumbled by 149 billion cubic feet for the week ending March 1, which matches the market’s anticipation of a drop of 146 billion cubic feet. In total, US stockpiles stand at 1.39 trillion cubic feet, down 243 billion cubic feet from the same time a year ago and 464 billion below the five-year average.

The bullish investors might be running out of steam as seasonal conditions and bearish supplies may be sending natural gas prices lower. With only a couple of weeks left of winter, and the latest forecasts suggesting rising temperatures, the demand for natural gas might slide throughout the rest of March.

Analysts do say that temperatures are rising but they remain well below normal, which could be good news for natural gas sellers. Experts note that the technicals provide evidence of a slow recovery from recent lows, but there may not be enough momentum for prices to top $3.

In industry news, the American natural gas industry continues to boom, with billions of dollars worth of new investments in projects, pipelines, and facilities. Moreover, foreign markets are turning to the US for natural gas demand, including Mexico, despite its pledge to be energy independent in the coming years.

In other energy commodities, April West Texas Intermediate (WTI) crude oil futures rose $0.34, or 0.6%, to $56.57 per barrel. May Brent crude futures tacked on $0.18, or 0.28%, to $66.18 a barrel. April gasoline futures added $0.01, or 0.56%, to $1.80 per gallon. April heating oil futures was flat at $2.01 a gallon.

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