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Natural Gas Sinks On Bets For First Storage Build Of Injection Season

Published 05/02/2018, 09:40 AM
© Reuters.  Natural gas under pressure ahead of storage data
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Investing.com - Natural gas futures were under pressure on Wednesday morning, as market players looked ahead to weekly data from the U.S. which is expected to show the first storage build of the injection season.

Front-month U.S. natural gas futures lost 3.6 cents, or around 1.3%, to $2.766 per million British thermal units (btu) by 9:40AM ET (1340GMT).

The commodity gained 3.9 cents, or 1.4%, on Tuesday, thanks to lingering winter-like weather conditions.

However, market experts warned that futures are likely to remain vulnerable in the near-term as below-normal temperatures in May mean less than they do in January and February.

Spring usually sees the weakest demand for natural gas in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.

Meanwhile, market participants looked ahead to this week's storage data due on Thursday, which is expected to show the first build of the season.

Analysts forecast an increase of 47 billion cubic feet (bcf) for the week ended April 27. That compares with a decline of 18 bcf in the preceding week, an increase of 67 bcf a year earlier and a five-year average rise of 69 bcf.

Total natural gas in storage currently stands at 1.281 trillion cubic feet (tcf), according to the U.S. Energy Information Administration.

That figure is 897 bcf, or around 41.2%, lower than levels at this time a year ago, and 527 bcf, or roughly 29.1%, below the five-year average for this time of year.

Record high domestic production levels have overshadowed the fact that stocks in storage are well below their seasonal averages for this time of year.

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