Bloomberg News

Gas Stockpiles Probably Fell More Than Average, Analysts Say

February 22, 2012

Feb. 22 (Bloomberg) -- U.S. natural-gas supplies probably fell more than the five-year average last week as prices near 10-year lows boosted demand for the heating and power-plant fuel, analyst estimates compiled by Bloomberg show.

Inventories dropped 170 billion cubic feet, or 6.2 percent, to 2.591 trillion cubic feet in the week ended Feb. 17, based on the median of 18 estimates. The five-year average decline for the week is 145 billion, according to the Energy Department, which is scheduled to release its weekly supply report tomorrow.

A stockpile surplus in the week ended Feb. 10 rose to 765 billion cubic feet, 38 percent above the five-year average, last week’s report showed.

“Gas is moving a lot of coal out, possibly as much as 5 billion or 6 billion cubic feet a day,” said Ron Denhardt, vice president of natural gas services at Strategic Energy & Economic Research Inc. in Winchester, Massachusetts. “With this warm weather it needs to move more.”

Low-priced gas will displace coal in power plants in the central and western U.S. this year, Barclays Capital said yesterday.

Switching from coal to gas usually occurs at electric generating plants in the eastern U.S., where coal prices are highest, Shiyang Wang, an analyst for Barclays in New York, said in a report to clients. Gas will displace coal in other regions this year, Wang said.

The stockpile estimates ranged from declines of 125 billion to 178 billion cubic feet. About 51 percent of U.S. households use gas for heating, according to the Energy Department.

Demand for heat across the U.S. trailed normal by 7 percent in the week ended Feb. 18, according to Belton, Missouri-based forecaster Weather Derivatives. Demand in the Midwest was 18 percent below normal.

Natural gas rose 20.7 cents, or 8.4 percent, to $2.684 per million British thermal units last week on the New York Mercantile Exchange. The March-delivery contract today rose 1.7 cents, or 0.7 percent, to settle at $2.643. Prices have dropped 13 percent this year.

--With assistance from Christine Buurma in New York. Editors: Bill Banker, Charlotte Porter

To contact the reporter on this story: Gene Laverty in Calgary at glaverty@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net


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