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Natural Gas Slides on Large Build in US Stockpiles

June 6, 2019 at 15:16 by Andrew Moran

Natural gas futures are sliding on Thursday after the US government reported a bigger-than-expected increase in domestic inventories of the energy commodity. Natural gas prices are now trading at their lowest levels in nearly four years.

July natural gas futures tumbled $0.055, or 2.31%, to $2.32 per million British thermal units (btu) at 14:54 GMT on Thursday on the New York Mercantile Exchange. The last time natural gas traded at this point was in October 2015. Natural gas is on track for a weekly plunge of about 9%, adding to its year-to-date declines of 19%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas climbed by 119 billion cubic feet for the week ending May 31. This is higher than the market forecast of 111 billion cubic feet. In total, stockpiles stand at 1.986 trillion cubic feet, up 182 billion cubic feet from the same time a year ago. They are also 240 billion below the five-year average.

But this comes as all the data show how output has ramped up in natural gas-producing states.

For instance, total natural gas production in Pennsylvania advanced 14.7% in the first quarter of 2019, compared to the same time in the previous year. The Keystone State is now second in the US in natural gas output, right behind Texas, which experienced 6.1 trillion cubic feet of natural gas output last year.

The Pennsylvania Independent Fiscal Office said in a report:

Despite decelerating from the previous two quarters, production growth continued to show significant strength.

The rest of the energy market is hardly budging. July West Texas Intermediate (WTI) crude oil futures rose $0.02, or 0.04%, to $51.71 per barrel. August Brent crude futures added $0.16, or 0.28%, to $60.79 a barrel. July gasoline futures dipped $0.005, or 0.3%, to $1.68 a gallon. July heating oil futures fell $0.01, or 0.5%, to $1.77 per gallon.

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