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Natural Gas Tries to Find Direction After Smaller-Than-Expected Jump in Supplies

July 19, 2018 at 15:08 by Andrew Moran

Natural gas futures are trying to find direction on Thursday after the US government reported a smaller-than-expected increase in domestic stockpiles. Natural gas prices have been seesawing during the morning portion of the trading session, but they are still on track for a steep weekly decline.

August natural gas futures rose $0.03, or 1.1%, to $2.751 per million British thermal units (btu) at 14:40 GMT on Thursday on the New York Mercantile Exchange. Over the last five trading sessions, natural gas has tumbled nearly 3%, contributing its one-month loss of 8.6%.

According to the US Energy Information Administration (EIA), domestic natural gas inventories climbed by 46 billion cubic feet for the week ending July 13, which is lower than the market forecast of 59 billion cubic feet. US stockpiles now total 2.249 trillion cubic feet, down 710 billion cubic feet from the same time a year ago. They are also 535 billion below the five-year average.

Last week, the EIA reported that natural gas will continue to eat away at coal’s share of the US energy market for another two years. Analysts anticipate that natural gas will establish a record contribution to overall domestic energy production as the US and the entire world move away from coal, with or without government intervention.

The federal energy agency noted in its report:

In this outlook, coal’s forecast share of electricity generation falls from 30% in 2017 to 28% in 2018 and to 27% in 2019.

In 2017, oil producers around the world burned off less natural gas, reversing a trend that began in 2010, says the World Bank. According to its Global Gas Flaring Reduction Partnership, approximately 141 Bcm of gas was flared, down roughly 5% from the previous year. Russia led the world in burning off the most gas, but it also reported the largest decline in flaring.

In other energy markets, September West Texas Intermediate (WTI) crude futures surged $0.81, or 1.2%, to $68.56 per barrel. September Brent crude futures rallied $0.58, or 0.77%, to $73.46 a barrel. September gasoline futures rose $0.0053, or 0.26%, to $2.0211 per gallon. September heating oil futures advanced $0.01, or 0.43%, to $2.10 a gallon.

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