NATURAL GAS DROPS BIGGER-THAN-EXPECTED SUPPLY DRAWDOWN

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Natural gas

 

February natural gas futures dropped $0.036, or 1.34%, to $2.653 per million British thermal units (BTU) at 16:10 GMT on Thursday on the New York Mercantile Exchange. Natural gas is trading smooth for the week, but it has been on a tear throughout the first two weeks of the calendar year, surging nearly 5%.

 

As stated by the US Energy Information Administration (EIA), domestic inventories of natural gas diminished by 134 billion cubic feet in the week finishing January 8. S&P Global Platts had penciled in a drop of 123 billion cubic feet. In sum, US supplies attain at 3.196 trillion cubic feet, up 126 billion cubic feet from the identical time a year ago. They are also 218 billion cubic feet over the five-year average.

 

Winter temperatures have been suppressed so far, but storage resignations have trended more distinguished than the five-year average. But freezing weather is projected to turn to the US, Canada, and Europe next week.

 

A polar vortex is when a mass of cool, low-pressure air flows south from the Arctic. Following a two-year gap, the polar vortex is exacted to respond and end the above-seasonal temperatures. Daily highs are assumed to hit the freezing mark. Market analysts forecast that the vortex could be more severe than what occurred in 2014 when flights were restricted, customers stayed inside, and supply chains were interrupted.

 

If the projections are correct, it would be great news for natural gas prices as it would increase heating demand.

 

Meantime, Goldman Sachs calculates a perfect bullish storm for natural gas in the 2021 and 2022 calendar years. The financial institutions called supply interruptions, shipping setbacks, vital liquefied natural gas (NG) demand, and tightness in coal markets. All in all, Goldman prophesies a market asymmetry by October 2021, leading to a regular price of $3.25 per million British thermal units by the summer.

 

In other energy commodities, February West Texas Intermediate (WTI) crude oil futures were maintained at $52.91 per barrel. March Brent crude futures dropped $0.24, or 0.43%, to $55.82 a barrel. February gasoline futures slid $0.0074, or 0.48%, to $1.5414 per gallon. February heating oil futures are bound up by $0.0036, or 0.25%, to $1.6029 a gallon.

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