Natural Gas Crashes 9% on Surprise Build in US Inventories

Natural gas futures crashed on Thursday following a larger-than-expected build in domestic inventories. The energy commodity has taken a beating over the last week after soaring beyond $9 on recession fears and a key facility offline that added a handsome sum back to the market.

July natural gas futures plunged $0.608, or 8.88%, to $6.25 per million British thermal units (Btu) at 15:12 GMT on Thursday on the New York Mercantile Exchange. Natural gas is poised for a weekly loss of at least 15%, but it is still up more than 66% year-to-date.

According to the US Energy Information Administration (EIA), domestic supplies of natural gas rose 74 billion cubic feet in the week ending June 17, topping the market estimate of 65 billion cubic feet.

In total, US inventories of natural gas stood at 2.169 trillion cubic feet, down 305 billion cubic feet from the same time a year ago. They are also 331 billion cubic feet below the five-year average.

The inventory data were surprising considering that much of the US was hot. Next week’s storage figures will be highly anticipated considering that adjustments in the weather outlook reverted to cooler, despite hotter trends forming in recent days.

“Overall, we continue to view the pattern as bullish through the weekend, neutral early next week, then slightly bullish July 1-7,” NatGasWeather said in a note. “…To our view, what’s most important going forward is if a hotter than normal U.S. pattern occurs for most of July and August. If so, it will be able to offset a decent amount of the lost demand from the Freeport outage.”

The outage of Freeport LNG added about two billion cubic feet a day to the energy market.

In other energy commodities, July West Texas Intermediate (WTI) crude oil futures declined $1.08, or 1.02%, to $105.11 a barrel. August Brent crude futures shed $1.32, or 1.21%, to $107.33 per barrel. July gasoline futures shed $0.0395, or 1.05%, to $3.6907 a gallon. July heating oil futures fell $0.0659, or 1.54%, to $4.2149 per gallon.

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