The rally in the natural gas exchange traded fund is burning out on a higher-than-expected supply increase, but losses were tempered by growing Atlantic hurricane activity.
The United States Natural Gas Fund (UNG) declined 2.2% in mid-day trading Thursday. UNG gained 8.9% over the past month and is up 2.1% year-to-date.
The U.S. Energy Information Administration revealed an increase of 58 billion cubic feet in natural gas inventories for the week ended Aug 30. Meanwhile, market observers anticipated an injection of 55 bcf, according to Bloomberg.
The weekly EIA natural gas report provides inventory data that helps determine prices for natural gas products.
Total stock piles now stand around 3.188 trillion cubic feet, down 20 billion cubic feet year-over-year. However, supply remains 43 billion bcf above the five-year average.
NYMEX natural gas futures were down 2.7% Thursday, trading around $3.6 per million British thermal units.
The declines were buoyed by speculation of increased hurricane activity, Investing reports. The U.S. National Hurricane Center said Tropical Storm Gabrielle formed south of Puerto Rico and issued storm warnings.
Tropical weather can disrupt production in offshore facilities. The Gulf of Mexico accounts for 10% of U.S. natural gas supply.
Natural gas prices have also been supported by above-normal temperature forecasts, especially across the eastern U.S.
United States Natural Gas Fund
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Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.