Natural gas futures tumble 4% after U.S. supply data

Investing.com - Natural gas futures fell to a fresh seven-week low during U.S. morning trade on Thursday, after a report from the U.S. Energy Information Administration showed U.S. gas supplies rose more-than-expected last week.

On the New York Mercantile Exchange, natural gas futures for delivery in September traded at USD2.707 per million British thermal units during U.S. morning trade, plunging 4.2%.       

It earlier fell by as much as 4.7% to trade at a session low of USD2.686 per million British thermal units, the lowest level since June 28.

The September contract traded at USD2.763 prior to the release of the U.S. Energy Information Administration report.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended August 17 rose by 47 billion cubic feet, above market expectations for an increase of 38 billion cubic feet.

Inventories rose by 66 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 53 billion cubic feet, according to U.S. Energy Department data.

Total U.S. natural gas storage stood at 3.308 trillion cubic feet as of last week. Stocks were 423 billion cubic feet higher than last year at this time and 357 billion cubic feet above the five-year average of 2.961 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 115 billion cubic feet above the five-year average, following a net injection of 48 billion cubic feet.

Stocks in the Producing Region were 178 billion cubic feet above the five-year average of 930 billion cubic feet, after a net injection of 4 billion cubic feet.

Market analysts have warned that without strong demand through the rest of the summer cooling season, gas inventories will reach the limits of available capacity later this year.

Stocks peaked last year in November at a record 3.852 trillion cubic feet.

A bout of extreme heat across much of the U.S. over the past two months helped boost natural gas prices above the key USD3.00-level in recent weeks. Prices rallied to a 2012 high of USD3.275 per million British thermal units on July 31.

But futures have come under heavy selling pressure since the start of August, losing almost 15% after extended weather forecasts pointed to milder weather across most parts of the U.S. in the next two weeks.  

Meanwhile, market players continued to monitor tropical storm activity in the Gulf of Mexico, amid concerns over a disruption to supplies from the region.

The U.S. National Hurricane Center said earlier Tropical Storm Isaac was moving westward through the eastern Caribbean Sea, with some forecast tracks still showing the storm heading into the Gulf of Mexico.

The agency also said that Tropical Depression Ten was west of the Cape Verde Islands in the Atlantic, while a tropical wave off the coast of Africa had about a 10% chance to develop further in the next 48 hours.

Production in federal waters in the Gulf of Mexico account for about 10% of natural gas output and prices typically spike when storms threaten production. The U.S. Atlantic hurricane season began on June 1 and ends November 30.

From a technical standpoint, prices were expected to find strong near-term support close to the 200-day moving average of USD2.680.

200-day moving averages are considered key trading levels for many investors, often serving as a floor for prices after big declines.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in October rose 0.45% to trade at USD97.72 a barrel, while heating oil for September delivery added 0.8% to trade at USD3.087 per gallon.