Natural Gas Rallies, Tests $6 Again on Weak Storage Report

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Natural gas futures are soaring on Thursday after the US government reported a smaller-than-expected build in domestic supplies. The energy commodity has reignited its rally after slumping over the last week. Can natural gas prices top its peak of $6.46?

November natural gas futures surged $0.287, or 5.13%, to $5.877 per million British thermal units (btu) at 15:30 GMT on Thursday on the New York Mercantile Exchange. Natural gas is on track for a weekly gain of more than 2%, adding to its year-to-date rally of 133%.

According to the US Energy Information Administration (EIA), domestic inventories increased 81 billion cubic feet in the week ending October 8, coming in lower than the median estimate of 94 billion cubic feet. This is also down from the previous week’s build of 118 billion cubic feet.

In total, US natural gas stocks stand at 3.369 trillion cubic feet, down 501 billion cubic feet from the same time a year ago. They are also 174 billion cubic feet below the five-year average.

Traders are also bullish on natural gas weather models suggest cooler conditions for the rest of October. This could finally erase the bearish sentiment from the recent mild weather.

putinFor investors, bulls are anticipating more widespread weather in parts of Asia and Europe early next month. But the market may be waiting for frigid cold shots at the height of autumn.

Bulls are also lifting prices ahead of the expected increase in Russian natural gas supplies. President Vladimir Putin confirmed late last week that the state-owned Gazprom would be pumping more gas into Europe as the continent suffers from sky-high prices and shortages. It is unclear if Moscow will also be transporting more coal in the region as many utilities transition back to the fossil fuel.

Looking ahead, market analysts are already calling a weak EIA storage report next week.

In other energy commodities toward the end of the trading week, November West Texas Intermediate (WTI) crude oil futures added $0.20, or 0.25%, to $80.64 per barrel. December Brent crude futures tacked on $0.29, or 0.35%, to $83.49 a barrel. November gasoline futures dipped $0.0059, or 0.25%, to $2.3996 a gallon. November heating oil futures edged up $0.0077, or 0.31%, to $2.5288 per gallon.

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