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Natural Gas Slips As Supply Drop Falls Short of Forecasts

Summary:
Natural gas futures are tumbling on Thursday after the US government reported a smaller-than-expected drop in domestic inventories. The decline is being attributed to warmer weather patterns throughout North America, reducing household energy demand. Prices are already starting off 2020 deep in red territory. April natural gas futures fell %excerpt%.015, or 0.7%, to .13 per million British thermal units (btu) at 14:43 GMT on Thursday on the New York Mercantile Exchange. This week, prices have been flat, but they are down about 2.5% on the year. According to the US Energy Information Administration (EIA), domestic stockpiles dropped by 44 billion cubic feet for the week ending January 3. The market had projected a decline of 50 billion cubic feet. In total, inventories stand at 3.148 trillion

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Natural gas futures are tumbling on Thursday after the US government reported a smaller-than-expected drop in domestic inventories. The decline is being attributed to warmer weather patterns throughout North America, reducing household energy demand. Prices are already starting off 2020 deep in red territory.

April natural gas futures fell $0.015, or 0.7%, to $2.13 per million British thermal units (btu) at 14:43 GMT on Thursday on the New York Mercantile Exchange. This week, prices have been flat, but they are down about 2.5% on the year.

According to the US Energy Information Administration (EIA), domestic stockpiles dropped by 44 billion cubic feet for the week ending January 3. The market had projected a decline of 50 billion cubic feet. In total, inventories stand at 3.148 trillion cubic feet, up 521 billion cubic feet from the same time a year ago. They are also 74 billion cubic feet above the five-year average.

There have been many factors involved to explain the slide in natural gas prices.

A major aspect has been the warmer-than-normal temperatures that have been common throughout the US and Canada. Despite frigid winter weather at the end of November, which made it seem like we were in store for a lot of snow and cold, the weather has been subdued. This has hurt natural gas demand since fewer households need to raise the temperature inside their homes. All the projections suggest that the rest of the winter will be average or above-average, except for a few days of deep freezes.

Meanwhile, global natural gas markets are suffering from an enormous supply glut. The vast supply of the energy commodity has sent prices to their lowest levels in years, causing companies to sell billions of dollars in assets and divest from the sector.

In other industry news, a recent University of California study found that more than 26,000 lives were saved in the US in the last decade due to the shift from coal to natural gas for electricity production. Researchers discovered that the closure of coal-powered facilities across the country slashed the emitting of pollutants that led to a myriad of health issues in communities nationwide.

In other energy markets, February West Texas Intermediate (WTI) crude oil futures shed $0.59, or 0.99%, to $59.00 per barrel. March Brent crude futures declined $0.47, or 0.72%, to $64.95 a barrel. February gasoline futures dipped $0.0115, or 0.7%, to $1.6375 per gallon. February heating oil futures dropped $0.025, or 1.3%, to $1.93 per gallon.


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Andrew Moran
I am a full-time professional writer. Prior to my self-employment, I worked as a reporter for Digital Journal covering the politics beat and The Toronto Times reporting on the city’s entertainment scene. I currently write mostly about business, marketing and finance

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