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Natural Gas Stages Comeback Amid Supply Drop, Investors Buying the Dip

Summary:
Natural gas futures are extending their winning streak on Wednesday as the energy commody retests . Natural gas prices are rising after the US government reported a weekly decline in domestic stockpiles. Is natural gas restarting another rally after traders bought the dip? January natural gas futures rose %excerpt%.044, or 1.52%, to .944 per million British thermal units (btu) at 19:16 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices have returned to their upward trajectory following a steep 10% correction. Year-to-date, natural gas is up 35%. According to the US Energy Information Administration (EIA), domestic inventories of natural gas fell by 18 billion cubic feet in the week ending November 20. This is in line with what the market had projected. In total, supplies

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Natural gas futures are extending their winning streak on Wednesday as the energy commody retests $3. Natural gas prices are rising after the US government reported a weekly decline in domestic stockpiles. Is natural gas restarting another rally after traders bought the dip?

January natural gas futures rose $0.044, or 1.52%, to $2.944 per million British thermal units (btu) at 19:16 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices have returned to their upward trajectory following a steep 10% correction. Year-to-date, natural gas is up 35%.

According to the US Energy Information Administration (EIA), domestic inventories of natural gas fell by 18 billion cubic feet in the week ending November 20. This is in line with what the market had projected. In total, supplies stand at 3.94 trillion cubic feet, up 322 billion cubic feet from the same time a year ago. They are also 250 billion cubic feet above the five-year average of 3.69 trillion cubic feet.

Investors were ostensibly buying the dip when natural gas prices declined to as low as $2.72 last week. The January contract is the most liquid right now, driven mainly by traders betting on heavy demand, which is the historical norm. But do the weather forecasts anticipate a frigid January that would require plenty of power-generation fuel consumption?

With the La Nina climate pattern expected to influence the winter season, weather models are anticipating a colder January and February, with above-average precipitation. But some elements of the market may be apprehensive about trusting these predictions after a warmer-than-average November and short-term outlooks expecting a modest December.

Still, the overall natural gas market is betting on freezing temperatures in January and February.

It is unclear if prices would be trending higher than they are on Wednesday because of the Thanksgiving holiday, which typically reduces volumes during the trading week.

In other energy commodities, December West Texas Intermediate (WTI) crude oil futures surged $0.74, or 1.65%, to $45.65 a barrel. January Brent crude futures were unchanged at $48.54 per barrel. December gasoline futures tacked on $0.0192, or 1.53%, to $1.27 per gallon. December heating oil futures added $0.0254, or 1.85%, to $1.3894 a 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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