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June natural gas slips in preweekend profit taking

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June natural gas slips in preweekend profit taking

Editor's Note: Please be advised that S&P Global Market Intelligence will no longer publish daily articles on price trends in the U.S. natural gas, electricity and emissions markets beginning June 1, 2018. Pricing data for these energy markets will continue to be available on the Market Intelligence platform.

June natural gas futures traded near unchanged in shallow negative territory for the majority of the Friday, May 18, session and settled 1.2 cents lower at $2.847/MMBtu in profit taking ahead of the weekend break.

Accelerated improvements to natural gas inventories and the anticipation of additional weekly builds to a healthy end-of-season working gas supply provided some downside pressure.

Natural gas inventories improved by 106 Bcf during the week ended May 11, an injection that was above consensus estimates at 104 Bcf and above the 89-Bcf build reported the previous week, as well as above the 64 Bcf year-ago and 87-Bcf five-year-average injections.

The total working gas supply lifted to 1,538 Bcf, shrinking deficits to 821 Bcf below the year-ago level and 501 Bcf below the five-year average storage level of 2,039 Bcf.

Natural gas inventories are expected to ascend through the injection season and need to climb by an average of about 12 Bcf/d to reach above 3.5 Tcf by early November, the American Gas Association said.

The difficulty in reaching that level will come from weather, as early and widespread heat is driving up cooling demand even as demand for heating lingers.

Total U.S. consumption of natural gas rose by 4% in the week to May 16 compared with the previous report week, as natural gas consumed for power generation climbed by 8% week over week, with average temperatures that rose higher than 75 degrees F in parts Texas and the Southeast, the U.S. Energy Information Administration said in its latest "Natural Gas Weekly Update."

At the same time, demand in the residential and commercial sectors increased by 3% with much of the West and Northeast cooler compared with the previous report week. Industrial-sector consumption stayed constant.

Meanwhile, natural gas production was stalled week on week, averaging 85.6 Bcf/d, as dry natural gas production slipped by 1% due largely to Northeast production declines associated with takeaway capacity reductions from the Millennium pipeline maintenance, the EIA said. Average net imports from Canada increased by 1% from the previous week.

The market will also keep a close eye on the combined oil and natural gas rig count as a guide to impending production. The Baker Hughes weekly rig count report showed a gain of one rig in the week to May 18 to 1,046 rigs. The total count sits 145 rigs above the corresponding week a year earlier.

Oil-directed rigs were unchanged on the week holding to a total of 844, which was up 124 from the same week in 2017. Natural gas-directed rigs were up one on the week to 200 and were up 20 rigs on the year.

Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power, natural gas index prices, as well as forwards and futures, visit our Commodities Pages.