Bloomberg News

Natural Gas Futures Drop in Survey on Bigger U.S. Supply Gains

June 07, 2013

Natural gas futures may fall next week as mild weather reduces demand for the power-plant fuel, boosting injections into storage, a Bloomberg survey showed.

Seven of 12 analysts, or 58 percent, predicted that futures will decline on the New York Mercantile Exchange through June 14. Four, or 33 percent, said gas will advance and one said prices will stay the same. Last week, 42 percent of participants said gas would decline.

Temperatures will be seasonal from the East Coast into the Midwest through June 20 with a chance for lower-than-normal readings in the Northeast next week, according to Commodity Weather Group LLC in Bethesda, Maryland. Gas prices yesterday fell to a 12-week low after government data showed the biggest weekly stockpile gain for the time of the year in four years.

“The storage injections during the summer are going to be a lot stronger than last year,” said Carl Neill, a consultant with Risk Management Inc. in Atlanta. “We are building storage very rapidly and if you have mild temperatures that is going to continue to be the case.”

Natural gas futures yesterday fell 17.4 cents, or 4.4 percent, to $3.827 per million British thermal units on the Nymex, the lowest settlement price since March 14. Gas has dropped 3.9 percent so far this week, heading for a second straight weekly drop. The futures are up 14 percent this year.

The futures yesterday broke through technical support at around $3.93 and $3.95, which may spur further declines as speculators unwind more bullish positions, Neill said.

Cooler Weather

The high in New York City on June 14 may be 67 degrees Fahrenheit (19 Celsius), 12 below normal, according to AccuWeather Inc. Washington’s high may be 11 lower than the usual reading at 73 degrees while Chicago may also be 73 degrees, 7 below normal.

Power plants will account for 32 percent of U.S. gas consumption this year, according to the Energy Information Administration.

U.S. stockpiles increased by 111 billion cubic feet to 2.252 trillion in the week ended May 31, the most for this time of the year since 2009, EIA data show. Analyst estimates compiled by Bloomberg predicted an increase of 100 billion. The five-year year average gain for the period is 92 billion.

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 gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

4 7 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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