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NYMEX October natural gas plummets on expiry day on bearish storage report

Houston — The NYMEX October natural gas futures contract settled 7.4 cents lower Thursday, rolling off the board at $2.428/MMBtu, following a larger-than-expected US storage draw.

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The front-month contract traded in a range of $2.39/MMBtu to $2.54/MMBtu Thursday.

"It's getting hit right now because of the high natural gas storage injection. This [should not] be unexpected. [We] have to realize natural gas has had a terrific percentage run in shoulder season," said Jay Levine, an independent analyst and principal at EnerJay.

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"August lows fell to [around] $2.04/MMBtu and went up to $2.71/MMBtu in October, which is a significant percentage run. We had a very substantial move off of the lows in a shoulder period - for not much of any reason. I know we're falling at around $2.40 today, but that's still up 20% higher than in August. Obviously, the 102 Bcf storage injection doesn't help," Levine said.

The US Energy Information Administration reported a bearish injection of 102 Bcf into US storage facilities in the week that ended September 20. The consensus expectations of an S&P Global Platts survey of analysts were for a build of 93 Bcf. The most recent week's total is the largest storage injection in September in the past three years.

US dry gas production is expected to continue to increase as the shoulder season begins, rising from 89.2 Bcf on Thursday to an average of 90.1 Bcf/d in the period eight to 14 days hence, according to S&P Global Platts Analytics.

"Looking into winter, [we] shouldn't be discouraged. I think natural gas is acting appropriately. I'm not surprised that we've come down considerably from the recent highs, because we went up so high from recent lows when natural gas dropped to $2.04/MMBtu in August." said Levine.

The NYMEX settlement price is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).

-- Courtney Love, Courtney.Love@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com

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