US natural gas prices fall in rail deal, storage construction
US natural gas futures fell 8% on Thursday as the railroad union reached a temporary work agreement with its workers.
Henry Hub Natural Gas (NGV2) futures fell $0.728 (-7.99%) to $8,397 in a rail deal, without which natural gas demand could have been increased in an already tight market. The disruption of the railway industry could have disrupted the flow of coal.
The larger-than-expected storage build-up of natural gas also affected prices, which were trading near record levels due to market tightness.
On Thursday, the Energy Information Administration’s weekly natural gas storage report showed that total gas operating in underground storage in the Lower 48 region rose to 2,771 billion cubic feet for the week ending September 9, up from 2,694 billion cubic feet the previous week. While this is higher than the week and a bearish sign for prices, working gas in storage is still 7.4% lower than this time last year, and 11.3% below the five-year average of 3,125 billion cubic feet.
The largest gain in terms of working gas in underground storage was observed in the Midwest, followed by the East. Working gas fell in the Pacific region for the week ending September 9.
The increase in inventories and the subsequent decline in prices could help relieve some of the price pressures that US natural gas buyers are currently experiencing.
The storage build was higher than analysts’ expectations.
The rail and storage-building package deal was enough to drive prices down significantly, and they fell as crude oil prices fell as well.
By Julian Geiger for Oilprice.com
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