U.S. Natural Gas Surge After Bullish Weekly Storage Data

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On Thursday morning, U.S. natural gas futures revered losses, spinning higher after data presented that natural gas supplies in storage in the U.S. increase less than expected the previous week.

Delivery of Natural gas in November on the New York Mercantile Exchange edged up 0.8 cents, or 0.27%, to trade at $3.013 per million British thermal units by 10:34AM ET (14:34GMT). Futures were at approximately $2.962 prior to the release of the supply data.

On Wednesday, futures declined to $2.944, a level not met since September 15.

In its weekly report, the U.S. Energy Information Administration stated that natural gas storage in the U.S. increase by 49 billion cubic feet in the week ended September 23, below expectations for a surges of 55 billion cubic feet.

That compared with an increase of 52 billion cubic feet in the prior week, 96 billion a year before and a five year average build of 97 billion cubic feet.

Total U.S. natural gas storage raised at 3.600 trillion cubic feet, 2.5 percent higher than levels at this time a year ago and 6.1 percent beyond the five year average for this time of year.

In recent months, gas futures have made a dramatic recovery, increasing approximately 50 percent since hitting a 20 year decline of $1.611 in early March, as a remarkably warm summer help out trim a supply glut that was influencing on prices.

In spite of the recent rally, increase are likely to stay limited as traders react to the reality that higher summer demand for the commodity is coming to an end.

Demand for natural gas has a tendency to increase during the summer months as warmer temperatures surge the need for gas fired electricity to power air conditioning.

However, with autumn having started on September 22, power burns to feed air conditioning demand have possibly peaked for now, according to the reports.

On Additional News

On Friday, oil prices declined as investors took profits following a 7% increase in the last two sessions, during uncertainties that Organization Of Petroleum Exporting Countries (OPEC) first planned production cut in eight years would make a significant dent in the global crude surplus.

Brent crude futures had dropped 63 cents to $48.61 a barrel by 0645 GMT, after settling the previous session up 55 cents, or 1.1%.

U.S. crude dropped 58 cents at $47.25, after closing up 78 cents and having reached a one month peak of $48.32 in the prior session. Both November deals expire after Friday’s settlement.

Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance stated “Brent and U.S. crude are on course for a weekly gain of around 7 percent, prompting investors to take profits in the Asian trading session.”

On Wednesday, the Organization of the Petroleum Exporting Countries (OPEC) agreed to reduce production to 32.5-33.0 million barrels per day (bpd) from approximately 33.5 million barrels per day, estimated by source to be the output level in August.

The information, including the quotas for each member and the implementation data, will be settled in November at OPEC’a policy meeting.

Analysts stated higher crude prices will spur non OPEC output, mainly U.S. shale oil. The U.S. oil drilling rig count has increased in 12 of the 13 past weeks.

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