US natural gas futures jump six percent to five-week high

June 16, 2014

US natural gas futures jumped 5.6 percent on Thursday to a five-week high after the government reported a slightly smaller-than-expected storage build. After three days of selling that pulled the contract back to $4.50, front-month natural gas futures on the New York Mercantile Exchange rose 25.4 cents, or 5.6 percent, to $4.762 per million British thermal units. The jump was the biggest daily percentage gain since mid-February.

The July NYMEX contract was already higher Thursday morning in sympathy with higher oil prices when the US Energy Information Administration said gas in storage climbed 107 billion cubic feet last week to 1.606 trillion cubic feet. That was slightly below analysts' forecasts, and kept gas in storage at an 11-year low for this time of year. The "lower-than-anticipated release broke a seven-week streak of outsized injections and triggered immediate futures buying that reversed the 4 percent week-to-date loss," said Teri Viswanath of BNP Paribas.

Analysts had expected a build of 110 bcf in the Reuters poll. The 107 bcf number was below the 119-bcf build last week, but above the 97-bcf build for the same week last year and the 88-bcf five-year average build. Price gains were limited because the weekly injection was the eighth in a row to exceed the five-year average. "The continued large injections place a slight cap on the market," said Aaron Calder of Gelber & Associates.

Copyright, Reuters, 2014.