Commodities Markets: Natural Gas Production Still Running at Record Highs
Natural gas prices have increased with cold US forecasts and reports production cuts underpinning prices despite a light weekly inventory withdrawal. Looking at the ETX Capital charts, prices for short-term futures contracts changed little, easing just 2.2 cents, or 0.9 percent.
Gas prices had sold off recently when the US Energy Information Administration reported that total gas inventories fell last week by 78 billion cubic feet to 2.888 trillion cubic feet. Traders and analysts had expected a larger 87-bcf decline.
The weekly inventory draw was well below the two important benchmarks of the year-ago fall of 206 bcf and the five-year average decline for that week of 191 bcf.
With natural gas production still running at all-time highs and inventories likely to end winter at a record high, most traders remain cautious about any upside without much colder weather to kick up heating demand.
Traders and investors often speculate on energies markets like natural gas and crude oil futures through firms like GFT Markets and InterTrader.
While several producers have said they would shut in some gas production due to low prices, traders said planned cuts so far were not enough to tighten a market seen as oversupplied by as much as 3 bcf per day, or more than 4 percent. Most analysts now expect inventories to end the winter at about 2.1 tcf, 35 percent above average and near the all-time high for end-season storage of 2.148 tcf set in 1983.
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