Natural gas prices fall on supply report, tropical storm supports

  

                 A bearish inventory report sent natural gas prices falling on Thursday, though the formation of Tropical Storm Karen in the energy-rich Gulf of Mexico curbed losses somewhat.

On the New York Mercantile Exchange, natural gas futures for delivery in November traded at USD3.531 per million British thermal units during U.S. trading, down 0.32%. 

The November contract settled down 1.86% at USD3.542 per million British thermal units on Wednesday.

The commodity hit a session low of USD3.494 and a high of USD3.570.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Sept. 27 rose by 101 billion cubic feet, above market expectations for an increase of 94 billion cubic feet.

Inventories increased by 77 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 82 billion cubic feet.

Total U.S. natural gas storage stood at 3.487 trillion cubic feet as of last week. Stocks were 155 billion cubic feet less than last year at this time and 49 billion cubic feet above the five-year average of 3.438 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 106 billion cubic feet below the five-year average, following net injections of 58 billion cubic feet. 

Stocks in the Producing Region were 102 billion cubic feet above the five-year average of 1.056 billion cubic feet after a net injection of 33 billion cubic feet.

The news sent gas prices falling earlier, though forecasts for colder weather and even snow to settle in over the central U.S. curbed losses.

Demand for natural gas tends to rise at the country's thermal power plants as temperatures drop, as homes and businesses throttle up on their heaters.

Also curbing loss was news that Tropical Storm Karen formed in the Gulf of Mexico near Mexico's Yucatan Peninsula with winds of 60 miles per hour.

The storm was forecast to reach hurricane strength before washing ashore as a strong tropical storm somewhere along the Louisiana, Mississippi, Alabama or Florida coast.

At the time of writing, a Hurricane Watch was in effect for Grand Isle, Louisiana, to Indian Pass Florida.

Tropical weather systems often disrupt production by prompting gas rig operators to evacuate offshore facilities.

The Gulf of Mexico is home to 10% of U.S. natural gas production.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in November were down 0.76% and trading at USD103.31 a barrel, while heating oil for November delivery were down 0.11% and trading at USD2.9895 per gallon. - investing.com