Natural gas futures sank more than 2% toward the end of the raucous trading week as US storage levels came in higher than expected last week. Natural gas has struggled to break out and flirt with $3, though the September rally has supported the energy commodity’s year-to-date gain. With mild temperatures, will natural gas continue to struggle?
December natural gas futures tumbled $0.062, or 2.26%, to $2.685 per million British thermal units (Btu) at 15:41 GMT on Thursday on the New York Mercantile Exchange. Natural gas is on track for a weekly loss of about 0.6%, paring its year-to-date rally to below 16%.
According to the US Energy Information Administration (EIA), domestic natural gas inventories rose 69 billion cubic feet for the week ending November 1. This is down from the previous week’s build of 78 billion cubic feet and slightly below the consensus forecast of 65 billion cubic feet.
While supplies fell by one billion cubic feet in the mountain region, three areas of the country contributed to the inventory build: South Central (27 billion cubic feet), Midwest (21 billion cubic feet), and East (15 billion cubic feet).
In total, US natural gas inventories stood at 3.932 trillion cubic feet, up 157 billion cubic feet from the same time a year ago. They are also 215 billion cubic feet above the five-year average of 3.717 trillion cubic feet.
Investors had been monitoring the shrinking natural gas surplus. However, due to modest weather conditions in the middle of the fall season, stocks appear to be stabilizing.
Recent weather outlooks suggest that the US will continue to experience mild weather into the middle of the month, which will further limit natural gas demand.
Natural gas prices initially rose following former President Donald Trump’s victory, citing the prospects of accelerated liquefied natural gas (LNG) exports.
In other energy markets on Thursday, December West Texas Intermediate (WTI) and Brent crude oil futures were little changed at $71.58 and $74.85 per barrel, respectively. December gasoline futures were flat at $2.03 a gallon, while December heating oil futures dipped $0.0104, or 0.46%, to $2.2596 per gallon.