Forexpros – Natural gas prices dropped on Thursday, ending a three day rally, despite a report indicating significant supply decline last week.
On the New York Mercantile Exchange, natural gas futures for March delivery traded at USD2.654 per million British thermal units during late U.S. trade, plunging 4.17%.
It traded at a high of USD2.83 per BTU and hit a low of USD2.59 per BTU.
The U.S. Energy Information Administration stated in its weekly report that natural gas storage in the U.S. in the week ending January 20 dropped by 192 million cubic feet , after declining by 87 million cubic feet the week before.
The market shrugged off earlier word of Chesapeake Energy stating it will immediately cut 8% of production and said it will cut its activity in regions that produce only gas in half by the second quarter.
The cutbacks in production are designed to reduce a supply glut in the United States caused by a warm winter season.
In bullish news earlier, The U.S. Energy department cut its estimate for natural gas reserves in the Marcellus shale formation by 66%, citing improved information on supply.
Natural gas rallied almost 18.5% in this week, prior to the selling, in response to the bullish news.
The U.S. National Oceanic and Atmospheric Administration stated last week that it expects the warmer than normal winter temperatures on the East Coast, Midwest and much of the Southwest to continue through mid February adding to the long term bearish sentiment.
Meanwhile, Occidental Petroleum announced it will cut back on natural gas drilling due to the low prices and Conoco Phillips agreed by limiting North American natural gas production investments.
Elsewhere on the NYMEX, light sweet crude oil futures for March settlement advanced 0.46% to trade at USD99.86 a barrel.
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