Natural gas futures dropped 16 week low after US supply data

Natural gas futures continued to drop on Thursday, dropping to the lowest level since March after a report from the US Energy Information Administration showed that natural gas supplies increased more than expected last week.

On the New York Mercantile Exchange, natural gas futures for August traded at 3.595 USD per million British thermal units during US trading hours, losing 3.8% on the day. Earlier in the session natural gas futures dropped 4.1% and hit a session low of 3.584 USD per million British thermal units.

Prior to the release of the US Energy Information Administration report, the August contract traded at 3.689 USD.

The US Energy Information Administration announced in its weekly report that US natural gas storage in the week prior June 21st increased by 95 billion cubic feet, higher than expectations for an increase of 88 billion. Inventories increased by 58 billion cubic feet in the same week last year, while the five year average shift for the week increased by 79 billion cubic feet.

US natural gas storage was at 2.533 trillion cubic feet since last week. Stocks were 522 billion cubic feet less than last year and 31 billion cubic feet lower than the five year average of 2.564 trillion cubic feet for this time of year.

The same report also showed that in the East Region, stocks were 89 billion cubic feet lower than the five year average.

Continuous expectations for weaker demand also weighed after weather forecasts indicated mild weather in the Northeastern US states next week.

Industry weather group MDA Weather Services reported expectations for near seasonal or below seasonal temperatures to spread across the eastern half of the nation during the next six to fifteen days. The US Northeast is a key gas cooling area. Mild summer temperatures lessen the necessity for gas fired electricity to cool homes, lowering demand for natural gas consumption.

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