Natural Gas Rises for First Time in Four Days After U.S. Retail Sales Gain

Natural gas futures rose for the first time in four days after data showed U.S. retail sales climbed the most in seven months, a sign that the economic recovery is accelerating.

Gas advanced as purchases rose 1.2 percent, the biggest gain since March, Commerce Department figures showed today in Washington. A U.S. gas surplus to the five-year average fell to 9.8 percent in the week ended Nov. 5 from 10.2 percent the previous week, according to the Energy Department.

“If consumers come back and start buying, it may have some positive impacts on gas,” said Carl Neill, an energy consultant at Risk Management Inc. in Atlanta. “We are near the bottom and as winter weather comes in, storage will fall and markets will move higher.”

Natural gas for December delivery rose 4.6 cents, or 1.2 percent, to settle at $3.845 per million British thermal units on the New York Mercantile Exchange. Gas has declined 31 percent this year.

The Standard & Poor’s 500 Index climbed 0.4 percent to 1,203.52 at 3:13 p.m. The Thomson Reuters/Jefferies CRB Index of 19 raw materials increased 0.8 percent to 306.01.

“With the stock market coming back up a little bit, the gas market may be shaking off some of the storage pessimism that we saw last week,” said Phil Flynn, an analyst with PFG Best in Chicago.

Independence Hub

Enterprise Products Partners LP’s Independence Hub in the Gulf of Mexico was shut over the weekend for regular maintenance, according to Rick Rainey, a company spokesman. The maintenance may last about five days, he said.

The hub can handle as much as 1 billion cubic feet a day, according to the company.

Gas tumbled 9.8 percent in the past three days after it settled on Nov. 9 at $4.21 per million Btu, the highest level in almost 12 weeks.

"$4 is a formidable resistance point,” said Tom Saal, senior vice president of energy trading at Hencorp Becstone Futures in Miami.

U.S. gas stockpiles rose 19 billion cubic feet in the week ended Nov. 5 to a record 3.84 trillion, the Energy Department said last week.

The increase was smaller than the five-year average gain of 30 billion cubic feet, department data showed. A surplus to year-earlier supplies narrowed to 0.8 percent from 1 percent.

Stockpile Estimate

Gas stockpiles may total 1.776 trillion cubic feet at the end of the winter heating season in March, up about 114 billion cubic feet from a year earlier, according to Energy Department estimates.

“U.S. gas supply growth has yet to hit a wall,” analysts including John Freeman at Raymond James & Associates Inc. said in a note today. Gas production will be more than 3 billion cubic feet a day higher in 2011 from this year, they said.

Gross gas production in the lower 48 states rose 1.8 percent to 65.79 billion cubic feet a day in August, according to the Energy Department’s monthly report known as EIA-914.

The report includes gas used for repressuring, quantities vented and flared, and non-hydrocarbon gas removed in treating or processing operations. Excluding those supplies, marketed gas production will average 61.49 billion cubic feet a day this year, the highest level since 1973, according to Energy Department estimates.

Mild Weather

Gas fell in earlier trading as temperatures will be above normal in the Northeast this week and across the Atlantic Coast and Midwest next week, according to Commodity Weather Group LLC in Bethesda, Maryland.

“We have a lot of gas and no real cold weather to speak of, and that just keeps the pressure on gas prices and keeps the bulls on the sidelines,” said Brad Florer, a trader at Kottke Associates Inc., an energy trading firm in Louisville, Kentucky.

The weather phenomenon known as La Niña is pushing up temperatures and it will be much warmer next week in the South, Midwest, and East than forecast last week, according to MDA Federal Inc.’s EarthSat Energy Weather in Rockville, Maryland.

New York will have a high of 60 degrees Fahrenheit (16 Celsius) on Nov. 23, 9 degrees above normal, according to AccuWeather Inc. in State College, Pennsylvania.

About 52 percent of U.S. households use natural gas for heating, according to the Energy Department.

Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, gained 5.94 cents, or 1.7 percent, to $3.5635 per million Btu on the Intercontinental Exchange.

Gas futures volume in electronic trading on the Nymex was 263,283 as of 3:14 p.m., compared with a three-month average of 265,000. Volume was 290,217 on Nov. 12. Open interest was 798,917 contracts, compared with the three-month average of 810,000. The exchange has a one-business-day delay in reporting open interest and full volume data.

To contact the reporters on this story: Moming Zhou in New York at Mzhou29@bloomberg.net;

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

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