Benzinga - by Neil Dennis, Benzinga Staff Writer.
Natural gas prices surged on Monday after EQT Corporation (NYSE:EQT), the largest U.S. producer, announced it was cutting output in response to low prices.
U.S. natural gas futures jumped 5.6% to $1.938, while exchange traded funds that track gas prices were also higher. The United States Natural Gas Fund (NYSE:UNG) was up 6% in pre-market trade at $16.42, while the ProShares Ultra Bloomberg Natural Gas (NYSE:BOIL) jumped 10.4% to $16.73.
Shares in EQT Corporation were up 0.3% at $37.01 in the pre-market session after the company, which operates in the Appalachian basin in the Northeastern U.S., said it would curtain around 1 billion cubic feet (bcf) of production a day for approximately 30-40bcf of net production in the first quarter.
“EQT has made the strategic decision to curtail production in response to the current low natural gas price environment resulting from warm winter weather and consequent elevated storage inventories,” the company said.
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While the U.S. Energy Information Administration reported a 96bcf drawdown in natural gas stocks during last week, Warren Patterson, head of commodity strategy at ING said stockpiles remained at comparatively lofty levels.
“The pace of inventory withdrawal remains below the five-year average fall of 143bcf due to warmer weather and ample supplies. Natural gas inventories are up almost 11.7% from the same period last year, while also remaining comfortably higher than the five-year average for this time of the year,” he said.
OPEC+ Extends Output Cuts Until June
The price of Nymex West Texas Intermediate (WTI) eased by 0.5% to $79.58 a barrel. Exchange traded funds tracking the price of U.S. crude were also lower, with the United States Oil Fund (NYSE:USO) dropping 0.2% in pre-market trading to $74.96.
WTI had, during February, climbed to a four-month high above $80 a barrel, however, news from OPEC that production during last month had climbed as some producers pumped more than the agreed output cuts, saw prices dip on Monday.
Yet weekly speculative positioning data from the Commodity Futures Trading Commission suggest that oil prices are likely to remain supported in the near term
Speculators increased their net long positions in WTI by 40,580 lots for a third-consecutive week, leaving a net long position of 174,730 lots in the week of Feb. 27, the most bullish net long position since late October.
“The ongoing uncertainty in the Middle East and concerns over tightening supply are currently supporting the uptrend in speculative bets,” said Patterson.
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