NEW YORK: US natural gas futures edged down on Wednesday in step with a drop in global energy prices and expectations that mild weather would lead to lower demand, as traders continued to keep a close eye on developments in the Middle East war.
Front-month gas futures for May delivery on the New York Mercantile Exchange traded 5.2 cents lower, or 1.8percent, to USD2.83 per million British thermal units at 10:06 a.m. EST. The contract dropped to its lowest level since February 26 in the previous session. “This market continues to swing in relatively close tandem with the large fluctuations in oil prices,” Ritterbusch and Associates said in a note.
The front-month Brent oil contract for June was down USD1.85, or 1.8percent, to USD102.12 per barrel at 1414 GMT, having dropped to a session low of USD98.35. US West Texas Intermediate crude futures for May slipped USD1.07, or around 1.1percent, to USD100.31 per barrel, after falling to USD96.50 earlier.
Uncertainty over the situation in the Middle East continued to unnerve markets, as US President Donald Trump again suggested the US-Israeli war with Iran could be nearing an end, resulting in the slide in crude prices.
“With the gas futures seeing limited support from the weather factor, we see this market as more reactive to large oil price downswings than to upswings,” Ritterbusch and Associates said.
Traders are awaiting the release on Thursday of the US Energy Information Administration’s (EIA) weekly gas storage report.
US energy firms are expected to have injected about 33 billion cubic feet (bcf) of gas into storage for the week ended March 27, according to early estimates from a Reuters poll. If accurate, inventories would rise to around 1,925 bcf, compared with a five-year average of 1,811 bcf, according to a survey conducted by Reuters.
Even though March is part of the winter season when utilities usually pull gas from storage to meet heating demand, mostly mild weather in recent weeks has allowed energy firms to start injecting gas into storage.
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