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Natural gas futures - Weekly outlook: August 12 - 16

Published 08/11/2013, 10:26 AM
Updated 08/11/2013, 10:26 AM

Investing.com - Natural gas futures ended Friday’s session sharply lower, as concerns over ample supplies and mild weather forecasts continued to weigh on sentiment.

On the New York Mercantile Exchange, natural gas futures for delivery in September fell 2.1% on Friday to settle the week at USD3.227 per million British thermal units.

Nymex gas prices fell to USD3.133 per million British thermal units on Thursday, the lowest level since February 15.

On the week, natural gas prices lost 3.4%, the third consecutive weekly decline.

Nymex gas futures tumbled to a five-and-a-half-month low on Thursday after a report from the U.S. Energy Information Administration showed that natural gas supplies rose more-than-expected last week.

But prices recouped losses to turn higher as a round of bargain buying kicked in and as investors closed out bets on falling prices.

The September contract has lost nearly 14% over the past three weeks, the biggest three-week drop in eight months, amid concerns over rising inventories and lingering below normal temperatures in the key Midwest and Eastern U.S. markets.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week rose by 96 billion cubic feet last week, above market expectations for an increase of 77 billion cubic feet.

Inventories rose by 25 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 42 billion cubic feet.

Total U.S. natural gas storage stood at 2.941 trillion cubic feet as of last week, slightly above the five-year average for the first time since March.

Early injection estimates for this week’s storage data range from 62 billion cubic feet to 77 billion cubic feet, compared to a 20 billion cubic feet increase during the same week a year earlier.

The five-year average for the week is a build of 42 billion cubic feet.

Meanwhile, market players continued to focus on near-term weather forecasts to gauge the strength of demand for the fuel.

Weather forecasting models continued to point to cooler temperatures across much of the U.S. Northeast and Midwest over the next six-to-ten-days, dampening summer cooling demand for the fuel.

Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.

Elsewhere in the energy complex, light sweet crude oil futures for September delivery settled at USD106.17 a barrel by close of trade on Friday, shedding 0.6% on the week.

Meanwhile, heating oil for September delivery lost 2.45% over the week to settle at USD2.993 per gallon by close of trade Friday.

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