Natural gas futures struggled to find direction on Thursday after the US government reported a slightly lower-than-expected domestic supply build. The energy commodity has a highly volatile trading week, although it has still enjoyed a monster year.
June natural gas futures surged $0.065, or 0.84%, to $7.792 per million British thermal units (Btu) at 19:32 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices are down nearly 8% this week, but they are still up more than 116%. Over the last 12 months, natural gas has soared 160%.
According to the US Energy Information Administration (EIA), domestic inventories of natural gas increased 76 billion cubic feet in the week ending May 6, falling short of the market forecast of 79 billion cubic feet.
In total, US inventories stand at 1.643 trillion cubic feet, down 376 billion cubic feet from the same time a year ago. They are also 312 billion cubic feet below the five-year average of 1.955 trillion cubic feet.
The inventory build was driven by tepid spring season cooling demand. At the same time, there was lower production levels due to spring maintenance work. Energy analysts say that the US needs moderate weather conditions to help improve the supply-demand balance after a brutal winter and hot summer.
Should cooling demand intensify in the coming weeks, which is a possibility due to weather models showing rising temperatures, the next few EIA storage reports might be unable to resolve the growing deficits.
“Indications are that this week is looking similarly tight, which, if we confirm that in next week’s report, is a pretty big deal,” the Bespoke Weather Services said in a note.
It might be too early to tell, but some estimates suggest next week’s build will be around 80 billion cubic feet.
In other energy commodities, June West Texas Intermediate (WTI) crude oil futures added $1.08, or 1.02%, to $106.79 per barrel. July Brent crude futures picked up $0.68, or 0.63%, to $108.13 a barrel. June gasoline futures soared $0.1227, or 3.33%, to $3.8082 per gallon. June heating oil futures were relatively flat at $3.943 a gallon.