U.S. natural gas futures fell 8% on Thursday as the rail union reached a temporary labor agreement with its workers.
Henry Hub natural gas futures (NGV2) fell $0.728 MBtu (-7.99%) to $8.397 on the railway deal, without which would have increased the demand for natural gas in an already tight market. A rail industry disruption would have disrupted the flow of coal.
A larger than anticipated storage build for natural gas also weighed on prices, which were trading near record highs due to the tight market.
On Thursday, the Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report showed that total working gas in underground storage in the Lower 48 rose to 2,771 Bcf for the week ending September 9, up from 2,694 Bcf in the week prior. While this is up from the week and a bearish signal for prices, working gas in storage is still down 7.4% from this time last year, and 11.3% lower than the five-year average of 3,125 Bcf.
The largest gain in terms of working gas in underground storage was seen in the Midwest, followed closely by the East. Working gas in the Pacific region fell for week ending September 9.
The build in inventories and subsequent drop in prices could help alleviate some of the price pressures currently plaguing US nat gas buyers.
The storage build was above analyst expectations.
The rail deal and storage build combo was enough to send prices substantially lower, and fell in lockstep with falling crude oil prices as well.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
Read More:U.S. Natural Gas Prices Plummet On Rail Deal, Storage Build
2022-09-15 17:00:00