Eksplorasi.id.Natural-gas futures rallied by 8% Thursday, their largest one-day percentage gain of the year, as U.S. government data revealed a smaller-than-expected weekly climb in domestic inventories, lifting prices to their highest level in nearly a month.
Oil futures, meanwhile, finished lower with West Texas Intermediate crude down a sixth straight session and sticking to their lowest levels in more than three months.
September natural gas NGU16, -0.49% jumped 21.3 cents, or 8%, to settle at $2.873 per million British thermal units, on its first full trading day as a front-month contract. That was the highest settlement since July 1, according to FactSet data. The percentage gain was the largest since December.
The U.S. Energy Information Administration reported Thursday that supplies of the commodity rose 17 billion cubic feet for the week ended July 22. That was below the average rise of 27 billion cubic feet expected by analysts polled by S&P Global Platts.
‘The natgas winter month contracts are going to be price based upon a tighter supply going into the main season for gas consumption…and nobody wants to get left out in the cold.’ he said.
“The injection was way below consensus, sending everybody running into winter contract speculation—and that’s what’s driving the rally,” said Richard Hastings, macro strategist at Seaport Global Securities.
“The natgas winter month contracts are going to be price based upon a tighter supply going into the main season for gas consumption, which is winter, and nobody wants to get left out in the cold,” he said.
While supplies are “more than sufficient going into November and even December,” winter is a “vast unknown and could always include some enormous withdrawals,” he added.
Oil weakness
For oil, unexpected growth in U.S. crude inventories and worries surrounding a potential slowdown in demand kept pressure on prices, but a weaker dollar after the Federal Reserve stood pat on interest rates offered some earlier support.
September WTI crude CLU6, -0.19% fell 78 cents, or 1.9%, to settle at $41.14 a barrel on the New York Mercantile Exchange. Prices, which posted losses in each of the last five sessions, settled at the lowest level since mid-April. September Brent crude LCOU6, +0.16% on London’s ICE Futures exchange fell 77 cents, or 1.8%, to $42.70 a barrel, ahead of the contract’s expiration at Friday’s settlement.
“A lot of the focus in the market seems to have been on the supply side of the ledger,” Tim Evans, chief market strategist at Long Leaf Trading Group, told MarketWatch. “Bearish inventory data this week, rising rig counts, and global supply figures that suggest a global glut of crude oil needs to be worked off.”
Oil prices eked out fresh three-month lows after the Energy Information Administration data released Wednesday showed a surprise 1.7-million uptick in U.S. crude stockpiles, keeping total inventories at a historical high. Gasoline inventories rose by 500,000 barrels, also well above the upper limit of the average range, the EIA said.
“What is truly noteworthy, however, is the demand side of the ledger,” said Long Leaf Trading’s Evans. “The lack of action by the U.S. [Federal Reserve Wednesday] suggests that we can expect generally weak demand based on the fact that economic conditions are not conducive and stable enough for a modest rate hike.”
U.S. durable-goods orders and initial-jobless claims all released over the last two days also “support the idea that market conditions will not support the robust demand needs to quickly work off the global supply glut,” he said.
But the Federal Open Market Committee’s decision Wednesday to leave interest rates unchanged dragged the greenback lower, which limited any losses for crude futures Thursday. Oil business is mainly conducted in dollars so a depreciation of the currency makes oil attractive for foreign buyers.
The ICE U.S. Dollar Index DXY, -0.14% was down 0.3%, trading around 0.6% lower week to date.
Week to date, WTI crude has lost 6.8%, while and Brent is down 5.3% as a growing surplus of gasoline fuels fears that demand for crude will languish in the coming months.
Petroleum products on Nymex ended lower Thursday, with August gasolineRBQ6, -0.43% down 1.5 cents, or 1.2%, at $1.306 a gallon, while August heating oilHOQ6, -1.72% fell 2.5 cents, or 1.9%, to $1.27 a gallon. The August contracts expire at Friday’s settlement.
Going forward, oil players will be eyeing the Bank of Japan’s interest rate decision and U.S. second-quarter gross domestic product data, both slated for release on Friday.
Eksplorasi/Dian/Source
