Natural Gas Falls a Fifth Day After Smaller-Than-Forecast Inventory Drop

Natural gas futures dropped for a fifth day, the longest losing streak in more than seven months, after a government report showed a smaller-than-expected decline in U.S. stockpiles.

Gas fell 2.2 percent after the Energy Department said stockpiles declined 45 billion cubic feet in the week ended April 1 to 1.579 trillion cubic feet. A survey of Bloomberg users predicted a decline of 56 billion. Temperatures will be above normal in the U.S. East through April 16, according to MDA EarthSat Weather in Gaithersburg, Maryland.

“The smaller storage withdrawal showed the market remains well supplied,” said Cameron Horwitz, an analyst in Houston at Canaccord Genuity. “This will be the last withdrawal of the season. Looking ahead, we expect a very stout refill season.”

Natural gas for May delivery fell 8.9 cents to $4.057 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since March 16. The five- day losing streak is the longest since the end of August.

Gas prices this week have slipped below the 50-, 100- and 200-day moving averages.

“The chart now has a decidedly bearish look,” Mike Fitzpatrick, a partner with the Kilduff Group in New York, an energy-consulting company, said in a note to clients today.

The five-year average change in stockpiles for the week is an increase of 13 billion cubic feet, Energy Department data showed. Supplies were 0.6 percent above the five-year average last week, down from a 4.4 percent surplus the previous week.

The federal agency plans to publish the weekly inventory data on petroleum and natural gas and the monthly Short-Term Energy Outlook on the scheduled release dates in the event of a government shutdown, Jonathan Cogan, a department spokesman, said in an e-mail.

Disappointing Data

“The data was something of an emotional disappointment, and since it follows a bearish surprise in the prior week it also tends to confirm that the overall supply/demand balance is weaker than had been thought,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York, in a note to clients.

Gas prices didn’t react to a 7.1-magnitude earthquake that struck Japan minutes before midnight. The quake spared the stricken Fukushima Dai-Ichi nuclear plant, according to Tokyo Electric Power Co.

The aftershock was one of the strongest since a record 9- magnitude earthquake and tsunami on March 11.

Milder Weather

Gas declined in early trading as forecasts for warmer weather signaled lower heating-fuel needs. U.S. heating demand will be 29 percent below average from tomorrow through April 14, according to Weather Derivatives in Belton, Missouri.

The high temperature in New York on April 10 will be 63 degrees Fahrenheit (18 Celsius), 4 degrees above normal, according to AccuWeather Inc. in State College, Pennsylvania. The high in Chicago may be 77 degrees, 20 higher than normal.

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

“At this time of the year you are not going to have much heating demand,” said James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas.

Gas futures volume in electronic trading on the Nymex was 431,269 as of 2:40 p.m., compared with the three-month average of 317,000. Volume was 301,790 yesterday. Open interest was 926,224 contracts. The three-month average open interest is 897,000.

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; Christine Buurma in New York at cbuurma1@bloomberg.net.

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

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