Natural gas futures added to their losses on Thursday after the US government reported a slightly larger-than-expected supply drawdown. Natural gas prices have been hammered this year, with not too many signals that they are headed for another bull market anytime soon. Can natural gas at least stay above $2?
May natural gas futures tumbled $0.059, or 2.74%, to $2.097 per million British thermal units (Btu) at 14:46 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices are poised for a weekly slide of just 0.1%, but they are down more than 48% year-to-date.
According to the US Energy Information Administration (EIA), domestic inventories of natural gas fell 23 billion cubic feet for the week ending March 31, up from the 47 billion cubic feet drawdown. This was also slightly larger than the market estimate of 21 billion cubic feet.
In total, US inventories stand at 1.830 trillion cubic feet, up 443 billion cubic feet from the same time a year ago. They are also 298 billion cubic feet above the five-year average of 1.532 trillion cubic feet.
Temperatures were mixed last week, with the northern US experiencing colder than normal temperatures and the bottom half of the country witnessing warmer than usual.
Natural gas prices have come under enormous pressure since November, driven primarily by weaker heating demand days amid milder-than-usual temperatures. By next week, market analysts warn that higher temperatures could send prices below $2 until the summer, especially as domestic production volumes recover.
Looking ahead to next week’s storage data, industry observers anticipate a withdrawal of 22 billion cubic feet.
The latest weather models suggest there will be considerably warmer weather in the coming days, which spells bad news for the so-called bridge fuel.
As a result, market experts say that the US surplus of natural gas could top 400 billion cubic feet, placing the country’s natural gas stocks into a comfortable position heading into next winter.
In other energy commodities, May West Texas Intermediate (WTI) crude oil futures tumbled $0.28, or 0.35%, to $80.33 per barrel. June Brent crude futures shed $0.31, or 0.36%, to $84.68 a barrel. May gasoline futures shed $0.0105, or 0.37%, to $2.8096 per gallon. May heating oil futures fell $0.0499, or 1.83%, to $2.6811 a gallon.