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Natural Gas Surges as US Posts Steep Weekly Supply Drop

December 7, 2018 at 16:08 by Andrew Moran

Natural gas futures climbed more than 3% at the end of the trading week as the US government reported a bigger-than-expected weekly decline in domestic inventories. Natural gas is looking to extend its gains to finish off the year after advancing 50% over the last three months.

January natural gas futures advanced $0.15, or 3.54%, to $4.48 per million British thermal units (btu) at 14:44 GMT on Friday on the New York Mercantile Exchange. Natural gas is set to record a weekly loss of 4%, which would be one of the first weekly declines in months. Year-to-date, the energy commodity is up 45%.

According to the US Energy Information Administration (EIA), domestic inventories decreased by 63 billion cubic feet for the week ending November 30, which is higher than the market estimates of 57 billion cubic feet. In total, US supplies stand at 2.991 trillion cubic feet, down 704 billion cubic feet from the same time a year ago. They are also 725 billion below the five-year average.

While the US is a global leader in natural gas production, there are certain pockets of the country leading the way.

Pennsylvania, which has gradually transitioned away from coal into the energy source, will have produced six trillion cubic feet of natural gas in 2018. The State of Independence saw its biggest gains this year in the third quarter.

Ohio has also climbed the ranks of top national producers, becoming the fifth-largest. As output levels have grown every quarter since 2013, there are more than 60,000 active oil and gas wells.

In other energy commodities, January West Texas Intermediate (WTI) crude oil futures tacked on $2.29, or 4.45%, to $53.76 per barrel. February Brent crude futures added $3.21, or 5.36%, to $63.27 a barrel. January gasoline futures edged up $0.08, or 5.5%, to $1.51 a gallon. January heating oil futures spiked $0.085, or 4.57%, to $1.94 per gallon.

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