Natural Gas Tests $8 Again After Modest US Supply Build

Natural gas futures posted modest gains on Thursday after the US government reported a build in domestic inventories. The energy commodity has endured a selloff this week as it is poised for a weekly decline of more than 13%. Can natural gas prices top $8 again?

October natural gas futures picked up $0.08, or 1.02%, to $7.922 per million British thermal units (Btu) at 19:07 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices are poised for a weekly loss of around 13%, paring their year-to-date increase to 120%.

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According to the US Energy Information Administration (EIA), domestic stockpiles surged 54 billion cubic feet in the week ending September 2, matching the market estimate. This is down from the 61 billion cubic feet increase.

In total, US supplies stand at 2.694 trillion cubic feet, down 222 billion cubic feet from the same time a year ago. They are also 349 billion cubic feet below the five-year average.

Natural gas futures have been on a downward trend this week as waning weather-driven demand weighed on so-called bridge fuel. Weather models suggest that cooler temperatures are expected in the next couple of weeks.

“California will cool late in the week as showers from Hurricane Kay off Baja arrive,” NatGasWeather said in a report. “The South and East Texas will also cool late in the week as a stalled weather system brings showers and highs of 80s.”

This summer, temperatures have been slightly lower than what the experts had anticipated, allowing notable supply builds that may be able toe cushion wintertime withdrawals.

Meanwhile, US production has increased to nearly 100 billion cubic feet, an all-time high.

In other energy commodities, October West Texas Intermediate (WTI) crude oil futures advanced $1.21, or 1.48%, to $83.15 per barrel. November Brent crude futures slipped $0.28, or 0.31%, to $88.89 per barrel. October gasoline futures added $0.0249, or 1.08%, to $2.3326 a gallon. October heating oil futures shed $0.0386, or 1.08%, to $3.5474 per gallon.

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