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Biggest One-Day Drop in Nat Gas Since 2009

Thursday, 2 Aug 2012 | 3:32 PM ET
Natural Gas
Natural Gas

Natural gas futuresplunged 8 percent Thursday as supplies grew more than expected last week and as hot temperatures were forecast to moderate by the middle of August.

This was the biggest one-day percentage decline for a front-month natural gas contract since September 17, 2009.

September natural gas futures closed down over 20 cents at $2.92 per million BTUS, settling below $3 for the first time in two weeks. Natural gas futures had topped $3.17 earlier in the session and hit a 7-month high of $3.21 on Tuesday.

Natural gas suffered steep losses after the U.S. Energy Information Administration reported storage levels rose by 28 billion cubic feet last week. Platts survey of analysts had predicted storage levels would rise by 20 to 24 billion cubic feet on average. The weekly supply increase was still less than the injection to storage at this time last year, and was also below the five-year average.

CitiFutures analyst Tim Evans says the report suggests that "more of the incremental power demand is being met by burning coal" and he sees "some bearish implications for the weeks ahead as well."

The $1.1 billion UNG ETF, which follows natural gas futures, was also hard hit in the session. After climbing steadily, gaining nearly 30 percent in the past two months alone, the UNG ETF also plunged nearly 8 percent Thursday.

Follow Sharon on Twitter: @sharon_epperson

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  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • Sharon Epperson is CNBC's senior commodities and personal finance correspondent.

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.

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