Natural gas futures - Weekly review: August 8 - 12

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Forexpros - Last week saw natural gas futures climb above the psychologically important USD4.00 level after a smaller-than-expected inventory buildup eased worries over a slowdown in U.S. demand, but gains were limited amid concerns over rising production levels in the U.S.

On the New York Mercantile Exchange, natural gas futures for delivery in September settled at USD4.065 per million British thermal units by close of trade on Friday, jumping 3.7% over the week, the first weekly gain in four.

Natural gas prices rose nearly 2.6% on Thursday after the U.S. Energy Information Administration said that U.S. natural gas storage rose by 25 billion cubic feet last week, below expectations for an increase of 33 billion cubic feet.

Stockpiles advanced by 36 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a buildup of 37 billion cubic feet.

Total U.S. natural gas storage stood at 2.783 trillion cubic feet. Stocks were 197 billion cubic feet less than last year at this time and 80 billion cubic feet below the five-year average of 2.863 trillion cubic feet for this time of year.

On Friday, prices gave up some ground as traders took some profits ahead of the weekend, while concerns over rising production levels also weighed.

Industry research group Baker Hughes said that the number of active rigs drilling for natural gas in the U.S. last week rose to 896 from 883, the fourth gain in five weeks and the highest since early March.

Natural gas traders closely watch the rig count to gauge future supply growth. The rig count has dropped sharply from a recent peak of 992 last August, but the current level of activity is still widely expected to lead to further production gains.

A drop to the 800-rig-level would be necessary to begin to balance the market, according to Baker Hughes.

Meanwhile, the Commodity Weather Group said Friday that while it expected above-average temperatures across the Western U.S. states, the firm's six-to-15 day forecast showed less intense heat was forecast in the U.S. Midwest and East during the period.

Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.

Elsewhere on the Nymex, light sweet crude oil futures for September delivery traded at USD85.69 a barrel by close of trade on Friday, dropping 1.6% over the week, while heating oil for September delivery slumped 1% on the week to trade at USD2.908 a gallon.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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