Natural gas futures dropped 2% after US energy report

Natural gas futures dropped to a five week low this Thursday, due to a report from the US Energy Information Administration which showed natural gas supplies increased more than expected last week.

During US morning trade on the New York Mercantile Exchange, natural gas futures for June delivery traded at 3.909 USD per million British thermal units which is down 1.7% on the day.

NYMEX natural gas prices dropped by 2.1% earlier in the trading session and hit a session low of 3.890 USD per million British thermal units.

NYMEX gas prices have increased aggressively in recent weeks, adding about 30% since mid-February, urged by calls for colder temperatures in major consuming regions across the U.S. that helped tighten the market.

The June contract traded at 3.946 USD before the release of the US Energy Information Administration report. The US Energy Information Administration reported that natural US gas storage in the week ended May 3rd added 88 billion cubic feet, which is higher than expectations for an increase of only 83 billion cubic feet.

Natural gas inventories increased 30 billion cubic feet the in same week last year, while the five year average for the week increased in 69 billion cubic feet.

Overall US natural gas storage supported at 1.866 trillion cubic feet since last week. Stocks were 737 billion cubic feet less than last year’s and 99 billion cubic feet below the five year average of 1.963 trillion cubic feet for the same time in the past five years.

The report indicated that stocks were 109 billion cubic feet below the five year average in the East Region.

Natural gas futures were lower before the data due to expectations for mild weather in the rest of May.

The Commodity Weather Group announced earlier this week that temperatures across most of the US are expected to hold near average for this time of the year.

Gas use typically hits a seasonal low in the spring’s mild temperatures, before warm weather increases the demand for gas generated electricity to power air conditioning.

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