Natural gas futures took a breather on Thursday after the US government reported a slightly larger-than-expected increase in domestic inventories. The energy commodity has been on a tear this year, rallying more than 32%. Natural gas prices have been supported by brutal winter weather and tight global supplies.
May natural gas tumbled $0.026, or 0.54%, to $4.761 per million British thermal units (btu) at 18:48 GMT on Thursday on the New York Mercantile Exchange. Natural gas is poised for a weekly gain of 2%, bringing its year-to-date increase to 32.5%.
According to the US Energy Information Administration (EIA), domestic stockpiles fell 139 billion cubic feet in the week ending February 25, slightly bigger than the market forecast of 138 billion cubic feet.
In total, US supplies stand at 1.643 trillion cubic feet, down 216 billion cubic feet from the same time a year ago. They are also 255 billion cubic feet below the five-year average of 1.898 trillion cubic feet.
Although the Ukraine-Russia crisis has been at the forefront of global energy markets, natural gas has been climbing on weather models suggesting a frostier March, especially in the middle of the month.
“Cold air will linger over much of the northern half of the U.S. March 15-16 for continued moderate to strong national demand,” NatGasWeather said. “However, much of the weather data favors warm temperatures gaining ground March 17-19. Overall, national demand will be light to very light the next five days, then seasonal to strong” through mid-March.
This could weigh on storage projections, particularly as this is the time of the year when US inventories record injections.
Meanwhile, the International Energy Agency (IEA) urged the European Union to ditch its natural gas contracts with Russia to decrease dependence.
“Nobody is under any illusions anymore,” said IEA’s Fatih Birol, executive director. “Russia’s use of its natural gas resources as an economic and political weapon show Europe needs to act quickly to be ready to face considerable uncertainty over Russian gas supplies next winter.”
While the EU can work with liquid natural gas (LNG) exporters to import more, the IEA noted that this can still be consistent with the bloc’s Green Deal.
“Progress toward Europe’s net zero ambitions will bring down its use and imports of gas over time, but today’s crisis raises the specific question about imports from Russia and what more can be done in the immediate future to bring them down,” the report stated.
In other energy commodities, April West Texas Intermediate (WTI) crude oil futures declined $2.83, or 2.56%, to $107.72 per barrel. May Brent crude futures slipped $0.13, or 0.12%, to $110.36 per barrel. April gasoline futures tumbled $0.0292, or 0.88%, to $3.2791 a gallon. May heating oil futures edged up $0.0037, or 0.11%, to $3.4988 per gallon.