Bloomberg News

Natural Gas May Fall as Peak Heating-Demand Seasons Nears Close

March 22, 2013

Natural gas may slide next week as demand for the heating fuel tapers in the U.S. with the approach warmer weather, a Bloomberg survey showed.

Five of 10 analysts, or 50 percent, forecast that futures will drop on the New York Mercantile Exchange through March 28. Four, or 40 percent, said gas will rise and one predicted that prices will stay the same. Last week, 46 percent of participants said gas would advance.

Below-normal temperatures across the lower 48 states this week will recede to the central states from March 31 through April 4, according to MDA Weather Services in Gaithersburg, Maryland. Gas has rallied 17 percent this year and topped $4 per million British thermal units yesterday for the first time since September 2011, as unusually cold weather boosted demand and reduced a supply deficit.

“There’s not really a lot of demand and you have extremely high prices,” said John Woods, president of JJ Woods Associates and Nymex floor trader in New York. “It’s the end of the first quarter and people are going to take profits.”

Natural gas futures rose 6.3 cents, or 1.6 percent, to $3.872 per million Btu during the first four days of this week in New York. The futures yesterday jumped to $4.025, the highest intraday price since Sept. 15, 2011. Gas is heading for its fifth consecutive weekly gain, the longest streak since the period ended Jan. 21, 2011.

Stockpile Decline

About half of U.S. households use gas for heating, according to the Energy Information Administration, the Energy Department’s statistical arm.

Gas stockpiles fell by 62 billion cubic feet to 1.876 trillion in the week ended March 15, more than the five-year average decline of 26 billion for the period, the EIA reported yesterday. Analyst estimates compiled by Bloomberg showed an expected drop of 70 billion.

A supply surplus to the five-year average narrowed to 9.5 percent from 11.4 percent. Supplies were 21 percent below year- earlier levels, the widest deficit since April 2008.

The gas survey has correctly forecast the direction of prices 50 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex natural-gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

4 5 1

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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