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Natural Gas Spikes 2% After Less-Than-Expected Build in Weekly Stocks

June 27, 2019 at 15:32 by Andrew Moran

Natural gas futures are extending their rally on Thursday after the US government reported a less-than-expected jump in weekly inventories. After slipping into negative territory this quarter, natural gas prices are attempting to muster up a rally in the second half of 2019, but with weather forecasts showing moderate temperatures in the summer and early autumn, it could be hard for natural gas traders to see green.

August natural gas futures surged $0.052, or 2.29%, to $2.32 per million British thermal units (btu) at 15:09 GMT on Thursday on the New York Mercantile Exchange. The energy commodity is on track for a weekly gain of about 5%, but it remains 19% in the red so far on the year.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas climbed by 98 billion cubic feet for the week ending June 21. This was lower than the market forecast of 100 billion cubic feet. In total, supplies stand at 2.301 trillion cubic feet, up 236 billion cubic feet from the same time a year ago. They are also 171 billion below the five-year average.

Recent EIA data also found that domestic natural gas output increased more than 69%, even though the total natural gas rig count tumbled. Flooding the market with cheap and clean energy has caused a 70% decline in natural gas active futures and impacted stocks that specialize in this energy source.

In industry news, Kuwait is another major crude oil producer that is looking to invest in natural gas production. A unit of state-held Kuwait Petroleum Corporation (KPC) is looking to boost output from its assets in Australia and Canada within the next decade.

This comes as Saudi Arabia, another energy giant, has announced plans to invest billions of dollars in natural gas operations within the next 20 years.

Organization of the Petroleum Exporting Countries (OPEC) members have sought out lucrative energy sources at a time when countries are capping crude production to stabilize prices.

In other energy markets, July West Texas Intermediate (WTI) crude futures added $0.04, or 0.07%, to $59.42 per barrel. August Brent crude futures dipped $0.12, or 0.18%, to $65.57 a barrel. July gasoline futures slipped $0.017, or 0.88%, to $1.914 per gallon. July heating oil futures fell $0.015, or 0.73%, to $1.96 a gallon.

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