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Natural gas fell to the lowest price in more than 10 years in New York before a government report that is forecast to show stockpiles climbed amid a period of reduced demand for the fuel.
U.S inventories rose by 24 billion cubic feet to 2.511 trillion in the week ended April 13, based on the median of 20 analyst estimates compiled by Bloomberg. Consumption typically slumps after the winter heating season ends and before hot weather drives demand from power plants to run air conditioners.
“We can expect mild weather in the near term,” Shiyang Wang and Michael Zenker, analysts at Barclays Plc in New York, said in a report e-mailed today. “Thursday’s storage-change consensus indicates the market generally expects a 24 billion cubic feet injection. If the injection was higher than expected, gas contracts could see a fresh round of sell-offs.”
Futures for May settlement slid as much as 1.3 cents, or 0.7 percent, to $1.938 per million British thermal units, the lowest level since Jan. 28, 2002, on the New York Mercantile Exchange today. The contract was at $1.945 at 9:44 a.m. Singapore time.
U.S. gas inventories in the week ended April 6 expanded by 8 billion cubic feet to 2.487 trillion cubic feet, according to the Energy Department. Supplies for that week were 59 percent higher than the five-year average. The department is scheduled to release its next weekly stockpile report at 10:30 a.m. in Washington.
Commodities traders watch temperature forecasts to gauge energy use and demand. About 51 percent of U.S. households use gas for heating, according to the Energy Department.
Demand for natural gas from electricity generators peaks in the summer months to meet air-conditioning needs. Power plants consumed about 31 percent of U.S. gas supplies in 2011, department data show.
Standard & Poor's cut its forecast for 2012 natural gas prices at the Henry Hub in Louisiana, the delivery point for Nymex futures, by $1 to an average of $2 per million Btu as “production and storage levels continue to outstrip demand,” Paul Harvey, a credit analyst at the firm in New York, said in a note to clients yesterday.
BNP Paribas SA lowered its 2012 outlook for futures to $2.34 per million Btu from $2.70 in January, Teri Viswanath, director of commodities strategy with the firm in New York, said in a report yesterday. She also reduced her estimate for 2013 to $3.68 from $3.85 “to account for lingering weakness in the first quarter as a result of elevated inventories.”
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