US natural gas futures dropped nearly 7% on Thursday, reversing the gains in the prior session. The retreat was primarily attributed to a big storage build, a lower demand outlook, and a drop in global gas prices after Russia pledged more volumes to Europe for the winter heating season. US gas futures for December delivery dropped 41.6 cents (6.7%) to $5.782 per MMBtu, their lowest settlement since October 22. That reversed the 5% rise on Wednesday when the contracts closed at their highest since October 5.
Data from the Energy Information Administration (EIA) showed US utilities added 87 Bcf of gas into their storage last week. That was in line with analysts’ expectations for an 86-Bcf build and compared to an increase of 32 Bcf a year ago and the five-year average of 62 Bcf. Last week’s build pushed total inventories to 3.548 Tcf, just 3.4% behind the five-year average of 3.674 Tcf.
European gas prices plunged 11% after Russian President Vladimir Putin ordered Gazprom to begin shipping more gas to Europe once it is done filling domestic stocks, which is expected to happen by November 8. European gas storage is currently about 15% below normal levels, analysts said, which had been underpinning prices to record levels.
