Natural gas slides to 17-year low as glut widens
Natural gas futures have done it again, tumbling to a 1990s-era low for the second time in two months as a supply glut expands.
Gas dropped 3.8 percent to settle at $1.711 per million British thermal units on the New York Mercantile Exchange, the lowest close since March 19, 1999. Stockpiles fell by less than normal for a fourth straight week, government data showed.
Supply from U.S. shale formations has flooded the gas market, leaving stockpiles at a seasonal record. The glut only stands to grow amid mild winter weather, which is curbing demand for the heating fuel and threatening to keep prices low into the second half of the year.
Below-average withdrawals from gas storage have been “brutal” for the bulls, said Stephen Schork, president of Schork Group in Villanova, Penn.
“End-of-winter gas supplies are going to come in well above even my most bearish case,” Schork said. “The inventory reports just continue to stupefy the market.”
Gas futures are down about 27 percent this year. Inventories totaled 2.584 trillion cubic feet as of Feb. 19, 28.7 percent above the five-year average, Energy Information Administration data show.
Separately, crude oil rose to a four-week high after gasoline inventories dropped for the first time in 15 weeks and Venezuela’s oil minister said producing countries were discussing a March meeting site.
West Texas Intermediate oil for April delivery rose 92 cents to settle at $33.07 a barrel, the highest close since Jan. 29. Futures dropped as much as 3.4 percent to $31.07 earlier.
Venezuela, Russia, Qatar and Saudi Arabia are planning to meet in July, Venezuelan Oil Minister Eulogio Del Pino says during a television broadcast on TeleSur. The producing nations reached a preliminary agreement last week to freeze output at January levels if other states join them.
“The longer we stay above $30, the greater the chance that we’ve put in a bottom,” said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston. “The price action is bullish itself.”
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