) -- Natural gas futures fell Thursday despite a lower-than-expected supply increase as a weak read on manufacturing activity in the Philadelphia region and a dismal employment environment fueled investor concerns about the economy's recovery.
Natural gas storage in the lower 48 states added another 27 billion cubic feet for the week ending Aug. 19, the Energy Information Administration said Thursday. The injection was more bullish than projections provided by Platts, which called for storage levels to rise by 28 to 32 billion cubic feet.
Although natural gas futures initially rose on the Nymex after the report, the September delivery contract quickly reversed course. It finished the session 7 cents lower, or down by 1.6%, to settle at $4.17 per million British thermal units, as investors focused on fresh indications of weakness in the broader economy and the prospect of even more injections to come.
Earlier Thursday, the
Philadelphia Federal Reserve Bank
said manufacturing activity in the region contracted this month. That news followed the revelation that even more people
applied for state unemployment benefits for the first time last week.
Traders realize the injections are just going to start going up from this point forward," said Phil Flynn, energy analyst at PFGBest. "When you see weakness in manufacturing from the Philly Fed and that temperatures have cooled, the prices are starting to look forward. And we'll probably see a sizable injection next week."
With storage now at 3.012 trillion cubic feet, levels remain 5.8% below the year-ago level. But the report also showed supplies are still 7% above the five-year average.
U.S. Natural Gas Fund
ETF lost 1.3% to $7.04 during the session. Meanwhile, natural gas-related equities weakened alongside the broader market with the NYSE Arca Natural Gas index down by 1.6%.
Crude oil futures also weakened in the wake of the stumbling economic picture, as the most actively traded October delivery contract shed $1, or 1.3%, to settle at $74.77 a barrel. September heating oil lost 3 cents, or 1.2%, to settle at $2 a gallon, and October gasoline surrendered 3 cents, or 1.6%, to settle at $1.88 a gallon.
The NYSE Arca Oil index finished 1.8% lower and the Philadelphia Oil Service Sector index dropped 2.3% for the day. On the
, shares for both
slid, losing 1.4% and 1.5%, respectively.
--Written by Sung Moss and Melinda Peer in New York