Bloomberg News

Natural Gas Fluctuates After Supplies Decline More Than Forecast

March 28, 2013

Natural gas futures fluctuated in New York after a government report showed that U.S. stockpiles fell more than forecast last week.

Gas gained as much as 1.3 percent after an Energy Information Administration report showed inventories dropped 95 billion cubic feet in the week ended March 22 to 1.781 trillion cubic feet. Analyst estimates compiled by Bloomberg showed an expected withdrawal of 90 billion. Gas has surged 21 percent this quarter as winter storms brought below-normal temperatures.

“The market responded to it, but we couldn’t break a new high,” said Gene McGillian, an analyst and broker with Tradition Energy in Stamford, Connecticut. “That suggests that while it was higher than expected, it’s already priced in. Normally, when you get a number that’s bullish, you get a stronger reaction.”

Natural gas for May delivery rose 0.1 cent to $4.069 per million British thermal units at 10:39 a.m. on the New York Mercantile Exchange. Gas traded at $4.055 before the storage number was released at 10:30 a.m. in Washington. Trading was 40 percent above the 100-day average for the time of day. The fuel has climbed 16 percent this month, heading for the largest monthly gain since September.

The five-year average stockpile change for the week is an increase of 6 billion cubic feet. A surplus to the five-year average narrowed to 3.5 percent from 9.5 percent the previous week. Supplies were 26.5 percent below year-earlier inventories, compared with 21.1 percent in last week’s report.

Weather Outlook

Colder-than-normal weather will persist through the first week of April, according to Commodity Weather Group LLC in Bethesda, Maryland. About 50 percent of U.S. households use gas for heating.

New York’s low on April 2 will be 36 degrees Fahrenheit (2 Celsius), 4 below normal, according to AccuWeather Inc. in State College, Pennsylvania. Chicago will drop to 29 degrees, eight below normal.

Marketed gas production will average an all-time high of 69.6 billion cubic feet a day this year, up 0.7 percent from 2012, setting a record for a sixth straight year amid gains at shale deposits such as the Marcellus in the Northeast, according to a March 12 EIA report.

Cold weather disrupted output during the winter as water produced with gas crystallized and blocked flows from wells.

“As natural gas production in the United States shifts inland, well freeze-offs have become a greater supply disruption risk during the winter,” the EIA said in the report.

The boom in oil and natural gas production helped the U.S. cut its reliance on imported fuel. America met 84 percent of its energy needs last year, the most since 1991, government data show.

To contact the reporter on this story: Asjylyn Loder in New York at aloder@bloomberg.net.

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


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