Bloomberg News

Natural Gas Futures Decline After Near-Forecast Supply Drop

April 04, 2013

Natural gas futures fell in New York after a government report showed that a U.S. stockpile drop was close to analyst estimates.

The Energy Information Administration report showed that inventories declined 94 billion cubic feet in the week ended March 29 to 1.687 trillion cubic feet. A survey of Bloomberg users predicted a decrease of 95 billion. Analyst estimates compiled by Bloomberg showed a withdrawal of 91 billion.

“We’ve had an impressive run towards $4 but we just couldn’t stay up there,” said Gordy Elliott, a risk-management specialist at INTL FCStone Inc. in St. Louis Park, Minnesota. “We could maybe have another week of storage withdrawals, but the temperature forecasts are looking pretty warm and that’s going to give the market a little bit of a break from the upside.”

Natural gas for May delivery fell 0.9 cent to $3.891 per million British thermal units at 10:38 a.m. on the New York Mercantile Exchange. Gas traded at $3.942 before the storage number was released at 10:30 a.m. in Washington. Volume was 19 percent above the 100-day average. The futures have climbed 16 percent this year.

The inventory drop was the biggest on record for this time of year. The five-year average change for the week is a gain of 4 billion cubic feet, EIA data show. Stockpiles were 2.1 percent below the five-year average, flipping from a surplus for the first time in 18 months. Supplies were a record 31.6 percent below year-earlier inventories.

Warmer Weather

MDA Weather Services in Gaithersburg, Maryland, said the weather may be mostly warmer than normal in the eastern half of the U.S. from April 14 through April 18.

The low in New York on April 17 may be 57 degrees Fahrenheit (14 Celsius), 12 higher than usual, according AccuWeather Inc. in State College, Pennsylvania. The low in Cleveland may be 52 degrees, 9 more than average.

About 50 percent of U.S. households use gas for heating, according to the EIA, the statistical arm of the Energy Department.

The number of rigs drilling for gas in the U.S. fell by 29 to 389 last week, according to Baker Hughes Inc. in Houston. Gas rigs are at the lowest level since 1999.

The U.S. decreased its outlook for prices in a March 12 report. Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $3.41 per million Btu this year, lower than the previous estimate of $3.53, according to the EIA’s Short-Term Energy Outlook.

Gas Demand

The forecast for total gas consumption fell to 70.02 billion cubic feet a day from 70.31 billion in the report. Rising prices will curtail gas demand from power generators, the agency said.

Gas output rose to an all-time high of 28.5 trillion cubic feet in 2011, led by record output from shale deposits, the EIA said in a report Jan. 7. Shale accounted for 30 percent of total production in 2011, up from 22 percent the previous year.

The boom in oil and natural gas production helped the U.S. cut its reliance on imported fuel. The U.S. produced 84 percent of its own energy in 2012, the most since 1991, EIA data show. The measure of self-sufficiency rose to 88 percent in December, the highest since February 1987.

To contact the reporters on this story: Christine Buurma in New York at cbuurma1@bloomberg.net;

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


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus