Natural gas futures slumped toward the end of the trading week as a slightly smaller-than-expected build in US supplies failed to sustain the energy commodity’s momentum above $2.50. Natural gas prices have come under pressure in recent sessions, driven by below-seasonal temperature averages. Can natural gas turn things around?
July natural gas futures tumbled $0.122, or 4.75%, to $2.444 per million British thermal units (Btu) at 16:26 GMT on Thursday on the New York Mercantile Exchange. Natural gas is poised for a weekly loss of about 10%, adding to its year-to-date loss of about 40%. But the so-called bridge fuel is up about 3.55% over the past three months.
According to the US Energy Information Administration (EIA), domestic inventories of natural gas surged 96 billion cubic feet for the week ending May 19, down from the previous week’s increase of 99 billion cubic feet. This was also below the consensus estimate of 100 billion cubic feet.
This represented the seventh consecutive supply injection.
In total, US supplies of natural gas stood at 2.336 trillion cubic feet, 529 billion cubic feet higher than the same time a year ago. They are also 340 billion cubic feet above the five-year average of 1.996 trillion cubic feet.
In recent days, weather models have pointed to a hotter-than-normal summer, particularly in the south. However, healthy production volumes and higher-than-average inventories have diminished bulls’ appetites and allowed the bears to retake control of natural gas markets again.
Moreover, from a long-term perspective, it appears that Mexico could become the leading liquefied natural gas (LNG) exporter to Latin America. If this occurs, US LNG exports could slip, leaving more natural gas at home and sending domestic prices lower.
In other energy commodities, July West Texas Intermediate (WTI) crude oil futures plummeted $2.98, or 4.02%, to $71.35 per barrel. August Brent crude futures declined $2.79, or 3.57%, to $75.44 a barrel. July gasoline futures declined $0.0961, or 3.67%, to $2.5239 per barrel. July heating oil futures fell $0.0825, or 3.43%, to $2.3194 a barrel.