Natural Gas Ticks up 1% as Iran Conflict Sends Energy Prices Soaring

Natural gas futures ticked up on Thursday after a larger-than-expected withdrawal from US inventories. The energy commodity has seesawed since the war in Iran started, struggling to find direction amid uncertainty in production and shipments.

April natural gas futures rose $0.022, or 0.75%, to $2.939 per million British thermal units (Btu) at 15:45 GMT on Thursday on the New York Mercantile Exchange. Natural gas is still on track for a weekly gain of around 3%, but it is down 7% year-to-date.

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Since the joint US-Israel operations in Iran, natural gas has struggled to carve out a direction due to conflicting reports, US policy decisions, and concerns surrounding a prolonged war.

Qatar, for example, has shut down production, but the country says it could restart output in the next two weeks.

“And while global natural gas prices are surging because of the concerns about Qatar shut down, here in the US we are still concerned about oversupply,” Phill Flynn, energy strategist at The PRICE Futures Group, said in a note.

For now, investors have taken a wait-and-see approach to natural gas prices, combing through the fundamentals, including storage data.

According to the US Energy Information Administration (EIA), domestic inventories declined by 132 billion cubic feet for the week ending Feb. 27. This is down from the previous week’s drawdown of 52 billion cubic feet and higher than the consensus estimate of 121 billion cubic feet.

Withdrawals were broad-based: the Midwest (44 billion cubic feet), the East (42 billion cubic feet), and the South Central (41 billion cubic feet).

In total, US supplies stand at 1.886 trillion cubic feet, up 115 billion cubic feet from the same time a year ago. They are also 43 billion cubic feet below the five-year average of 1.929 trillion cubic feet.

Natural gas prices could come under pressure as warmer weather is expected in the central and eastern United States, reducing home heating demand.

In other energy markets, April West Texas Intermediate (WTI) crude oil futures surged $4.68, or 6.27%, to $79.34 per barrel. May Brent crude futures jumped $3.13, or 3.85%, to $84.53 a barrel. April gasoline futures soared $0.1233, or 4.9%, to $2.63862 a gallon. April heating oil futures rocketed $0.2554, or 7.75%, to $3.55 per gallon.

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