Natural gas futures drop 2% after U.S. supply data

Natural gas futures tumbled 2% during U.S. morning trade on Thursday, adding to losses after 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 USD2.986 per million British thermal units during U.S. morning trade, tumbling 2.5%. It earlier fell by as much as 3% to trade at a session low of USD2.962 per million British thermal units. The October contract traded at USD3.017 prior to the release of the U.S. Energy Information Administration report. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended September 7 rose by 27 billion cubic feet, just below market expectations for an increase of 28 billion cubic feet. Inventories rose by 80 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 72 billion cubic feet, according to U.S. Energy Department data. Total U.S. natural gas storage stood at 3.429 trillion cubic feet as of last week. Stocks were 342 billion cubic feet higher than last year at this time and 284 billion cubic feet above the five-year average of 3.145 trillion cubic feet for this time of year. Inventory did not top the 3.4-trillion cubic feet level in 2011 until October 5, 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 80 billion cubic feet above the five-year average, following a net injection of 38 billion cubic feet. Stocks in the Producing Region were 147 billion cubic feet above the five-year average of 957 billion cubic feet, after a net withdrawal of 13 billion cubic feet. Market analysts have warned that without strong demand through the rest of the summer cooling season, 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 12 weeks left before winter withdrawals begin to avoid breaching the government's 4.1 trillion cubic feet estimate of total capacity. Elsewhere on the NYMEX, light sweet crude oil futures for delivery in October rose 1.3% to trade at USD98.24 a barrel, while heating oil for October delivery added 0.3% to trade at USD3.225 per gallon.

Courtesy: ForexPros