Due to a smaller-than-expected weekly pull of the fuel from storage, US natural gas prices dropped 4% on Thursday, testing the crucial $2 support once more.
The Energy Information Administration, or EIA, reported that utilities pulled 47 billion cubic feet of natural gas from storage for heating and electricity generation last week, less than the 54 bcf predicted by industry analysts.
Gas Storage Balance For The Week
According to the EIA’s report on the gas storage balance for the week ending March 24, the weaker-than-expected removal left 1.853 trillion cubic feet, or tcf, of gas in U.S. inventories.
According to the EIA, the current U.S. gas inventory is up 21% from the five-year storage average and up 31% from the balance at the same time last year.
The market bulls who have been attempting to resume the spectacular rally they enjoyed just months ago before an unusually warm winter season led to a less-than-typical need for heating, sending excess gas supply into storage, have been plagued by the highest gas balance in recent memory, which is the bane of bulls in the market who have been trying to restart it.
On the Henry Hub of the New York Mercantile Exchange, natural gas for May delivery settled down 8 cents, or 3.8%, to $2.1040 per mmBtu, or metric million British thermal units.
Natural gas is expected to drop by 50% or more for the first quarter, which ends on Friday. This could be the largest quarterly loss in the history of the commodity.
The session low on Thursday was $2.082, with gas bears just cents away from trying to test the $2 support.
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US, Canada Are Accelerating
Meanwhile, signs that new LNG export projects from the US and Canada are accelerating, it is challenging to predict future supply and demand due to shifting natural gas prices.
The Lisims LNG plant is now able to begin the Canadian environmental review process thanks to permission from the British Columbia provincial government.
The step was taken after Cedar LNG, another project earmarked for Canada’s west coast, received clearance. Both are related to a promising development for Shell’s significant Kitimat project.
The United States is also developing new LNG export locations. Given the high cost of LNG and the requirement for energy security, additional LNG facilities could be constructed over the following five years at an estimated cost of $100 billion.
The US is anticipated to surpass Qatar and Australia as the world’s top LNG producer this year once Freeport LNG resumes operations.
The EIA asserts that US standard spot Henry Hub prices are anticipated to rise from their lows in February as a result of higher demand brought on by the restarting of the Freeport LNG export project.
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