Natural gas futures slumped on Thursday despite the US government recording a slightly smaller-than-expected domestic supply build. Prices have been performing well this month, flirting with the $3 mark again. Natural gas had struggled to sustain momentum in October, but the energy commodity appears to be renewing a rally heading into the winter season.
December natural gas futures fell $0.034, or 1.14%, to $2.949 per million British thermal units (Btu) at 14:44 GMT on Thursday on the New York Mercantile Exchange. Natural gas is on track for a weekly gain of about 9%, adding to its year-to-date rally of more than 27%.
New US Energy Information Administration (EIA) data show that natural gas inventories increased by 42 billion cubic feet for the week ending Nov. 8, down from the previous week’s drawdown of 69 billion cubic feet. This was slightly below the consensus estimate of 43 billion cubic feet.
Most of the supply injection was centered in two regions: South Central (19 billion cubic feet) and the Midwest (13 billion cubic feet).
In total, US natural gas supplies stood at 3.974 trillion cubic feet, up 158 billion cubic feet from the same time a year ago. They are also 228 billion cubic feet above the five-year average of 3.746 trillion cubic feet.
Natural gas prices are expected to be bullish under the incoming administration as President-elect Donald Trump is anticipated to reverse many energy and environmental regulations and policies from President Joe Biden.
This is primarily because Trump wants to bolster America’s energy dominance, including in the area of liquefied natural gas (LNG). Additionally, new reports suggest that Trump’s transition team is drafting executive orders to withdraw from the Paris climate agreement.
In the near-term, natural gas prices are benefiting from recent forecasts pointing to chilly temperatures over the next few weeks. While natural gas prices have retreated on warmer US weather forecasts, colder weather outlooks could boost home heating demand, says Eli Rubin of EBW Analytics.
“After momentum reached a bearish exhaustion point last week, bullish catalysts including crashing production and colder weather are sparking a long-awaited relief rally,” Rubin said in a note.
In other energy markets, December West Texas Intermediate (WTI) crude oil futures rose $0.51, or 0.73%, to $68.93 per barrel. January Brent crude futures jumped $0.52, or 0.72%, to $72.81 a barrel. December gasoline futures picked up $0.013, or 0.66%, to $1.9781 per gallon. December heating oil futures added $0.0155, or 0.7%, to $2.2348 a gallon.