Natural gas down despite supply numbers

Natural gas futures traded lower Thursday, despite a report from the U.S. Energy Information Administration showed U.S. gas supplies rose less-than-expected last week. On the New York Mercantile Exchange, natural gas futures for delivery in October traded at USD2.769 per million British thermal units during U.S. afternoon trade, giving back 0.91%. The October contract traded at USD2.823 prior to the release of the U.S. Energy Information Administration report. Prices initially jumped to the highest levels of the session following the EIA data, before turning lower in choppy trade. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended August 31 rose by 28 billion cubic feet, below market expectations for an increase of 36 billion cubic feet. Inventories rose by 62 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 60 billion cubic feet, according to U.S. Energy Department data. Total U.S. natural gas storage stood at 3.402 trillion cubic feet as of last week. Stocks were 395 billion cubic feet higher than last year at this time and 329 billion cubic feet above the five-year average of 3.073 trillion cubic feet for this time of year. Inventory didn't top the 3.3-trillion cubic feet level in 2011 until the end of September, with stocks peaking at a record 3.852 trillion cubic feet in November of last year. The report showed that in the East Region, stocks were 93 billion cubic feet above the five-year average, following a net injection of 34 billion cubic feet. Stocks in the Producing Region were 174 billion cubic feet above the five-year average of 943 billion cubic feet, after a net withdrawal of 7 billion cubic feet. Market analysts have warned that without strong late-summer and early-autumn cooling demand, gas inventories will reach the limits of available capacity later this year. The storage surplus to last year will have to be cut by at least another 150 billion cubic feet in the 13 weeks left before winter withdrawals begin to avoid breaching the government's 4.1 trillion cubic feet estimate of total capacity. Natural gas traders continued to focus on updated weather forecasts to gauge the strength of early-Autumn cooling demand. The National Weather Service's six- to 10-day outlook published Wednesday predicted mostly normal temperatures across the Northeast and Midwest and below-normal readings in the Southeast and along the West Coast. Demand for natural gas tends to fluctuate in late-summer and early-autumn based on hot weather and air conditioning use. A bout of extreme heat across much of the U.S. over the past two months helped boost natural gas prices above the key USD3.00-level in late-July. Prices rallied to a 2012 high of USD3.275 per million British thermal units on July 31. But futures have come under heavy selling pressure since the start of August, losing almost 17% after extended weather forecasts pointed to milder weather across most parts of the U.S. Elsewhere on the NYMEX, light sweet crude oil futures for delivery in October dropped 0.61% to trade at USD97.27 a barrel, while heating oil for October delivery added 1.3% to trade at USD3.158 per gallon.

Courtesy: ForexPros