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Natural Gas Surges 2% After Smaller-Than-Expected Weekly Supply Increase

September 27, 2018 at 15:02 by Andrew Moran

Natural gas prices are rallying more than 2% after the US government reported a smaller-than-expected increase in weekly inventories. Natural gas has been surging to its best level since January.

November natural gas futures surged $0.08, or 2.6%, to $3.06 per million British thermal units (btu) at 14:47 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices are trading at their best levels in eight months. Natural gas is also on track for another strong weekly gain, rising more than 2% over the last five trading sessions. Year-to-date, the energy commodity is up nearly 6%.

According to the US Energy Information Administration (EIA), domestic natural gas inventories increased by 46 billion cubic feet for the week ending September 21, which is less than the market forecast of 61 billion cubic feet. In total, natural gas stockpiles stand at 2.768 trillion cubic feet, down 690 billion cubic feet from a year ago. They are also 621 billion below the five-year average.

Earlier this week, the International Energy Agency (IEA) projected that the US will account for 75% of international growth in natural gas exports over the next five years. This is a bullish forecast for the domestic industry that is facing difficulties in obtaining project approvals and foreign tariffs impacting trade flows.

The IEA also named Australia and Russia as major exporters until 2023.

On Wednesday, the EIA reported that US crude supplies advanced by 1.9 million barrels. Gasoline stockpiles surged 1.5 million barrels, while distillate inventories declined by 2.2 million barrels.

On Thursday, November West Texas Intermediate (WTI) crude oil futures climbed $0.37, or 0.52%, to $71.93 per barrel. November Brent crude futures edged up $0.26, or 0.32%, to $81.60 a barrel.

In other energy markets, November gasoline futures rose $0.0045, or 0.22%, to $2.05 per gallon. November heating oil futures tacked on $0.01, or 0.4%, to $2.31 a gallon.

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