Bloomberg News

Gas Stockpile Gain Was a Third of Seasonal Norm, Analysts Say

May 02, 2012

U.S. natural-gas stockpiles increased by 30 billion cubic feet last week, 38 percent of the seasonal average, as weather extremes boosted demand, according to analyst estimates compiled by Bloomberg.

Inventories rose by 1.2 percent to 2.578 trillion in the week ended April 27, based on the median of 17 estimates. The five-year average increase for the week is 79 billion, according to the Energy Department, which is scheduled to release its weekly supply report tomorrow. The estimates ranged from gains of 20 billion to 35 billion cubic feet.

Hot weather in Texas and below-average temperatures in the Northeast and Midwest boosted demand for the power-plant and heating fuel last week. Dallas saw a high on April 27 of 89 degrees Fahrenheit (32 Celsius), 10 above normal, according to the National Weather Service. The low at Chicago’s O’Hare International Airport that day was 35 degrees, 8 below normal.

“A lot more gas is being burnt than you’d expect in a normal year, given the weather demand,” said Jonathan Arfa, an analyst at Gelber & Associates in Houston. “The low price is making gas very cheap to burn relative to coal.”

Natural gas futures last week gained 25.9 cents, or 13 percent, to $2.186 per million British thermal units on the New York Mercantile Exchange. Gas today fell 5.9 cents, or 2.5 percent, to $2.312 at 1:24 p.m. Prices are down 23 percent this year after settling at a decade low $1.907 on April 19.

Demand Outlook

Cooling demand across the U.S. was 4.7 percent above normal during the week ended April 28, according to Weather Derivatives. Cooler weather boosted heating demand in the Northeast to 34 percent above normal and to 7 percent above normal in north-central states, data from the Belton, Missouri- based forecaster show.

Temperatures will be normal or lower east of the Rocky Mountains from May 8 through May 15 and above-normal along the West Coast, according to the National Weather Service.

A surplus of gas narrowed during the week ended April 20 to 55 percent above the five-year average for the week from a six- year high of 61 percent at the end of March, Energy Department data show.

Gas production in the lower 48 states fell to 72.32 billion cubic feet a day in February from a revised 72.74 billion the prior month, the department’s Energy Information Administration said in its EIA-914 report on April 30.

Chesapeake Energy Corp. (CHK:US), the second-largest gas producer in the U.S. after Exxon Mobil Corp. (XOM:US), is “slowly ramping down gas drilling” and reducing spending at gas plays, Aubrey McClendon, chief executive officer of the company, said in a conference call with analysts today.

Chesapeake will reduce its gas rig count to 12 within 90 days from 50 at the beginning of 2012, McClendon said.

The number of rigs drilling for gas across the U.S. dropped by 18 last week to 613, the least since April 2002, data from Baker Hughes Inc. show.

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net;

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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Companies Mentioned

  • CHK
    (Chesapeake Energy Corp)
    • $28.18 USD
    • -0.84
    • -2.98%
  • XOM
    (Exxon Mobil Corp)
    • $101.74 USD
    • -0.83
    • -0.82%
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