Gas Supplies to Show Earliest Increase Since 2007, Analysts Say

U.S. natural-gas supplies rose last week, the earliest gain for this time of year since 2007, as above-normal temperatures crimped demand, according to analyst estimates compiled by Bloomberg (DOENUSCH).

Inventories expanded by 9 billion cubic feet, or 0.4 percent, to 2.378 trillion cubic feet in the week ended March 16, based on the median of 13 estimates. The five-year average stockpile change for the week is a decrease of 17 billion, according to the Energy Department.

“All it does is add to the overall bearish picture in the market,” said Alan Lammey, an energy analyst with WeatherBell Analytics LLC in Houston. “There is virtually no demand. You don’t have any coming from lingering winter demand and summer demand hasn’t come into play.”

Gas has tumbled 23 percent this year during the fourth- warmest U.S. winter on record, according to the National Climatic Center, while record production has contributed to a supply surplus since September.

Stockpiles usually begin to increase at the end of March or early April as heating-fuel use ebbs. Inventory levels rise through the warm-weather months to have enough on hand to meet peak demand during the following winter. The first increase after last winter came in the week ended March 25.

The average temperature in Philadelphia on March 13 was 65 degrees Fahrenheit (18 Celsius), 23 above normal, according to the National Weather Service. The average in Des Moines, Iowa, was 57 degrees, 19 above normal.

Heating Demand

Demand for heat in the U.S. was 60 percent below normal for the week ended March 17 and 82 percent below normal in the north-central states, according to Weather Derivatives in Belton, Missouri.

About 51 percent of U.S. households use natural gas for heating, according to the Energy Department.

The stockpile estimates ranged from a decrease of 6 billion cubic feet to an increase of 27 billion. The Energy Department’s weekly supply report is scheduled for release at 10:30 a.m. tomorrow in Washington.

There is typically a wide range in storage estimates during the transition period toward the end of winter and the beginning of spring when gas demand tends to fall, said Lammey. He predicts inventories may have increased by 9 billion to 12 billion last week based on pipeline flows.

An increase in inventories last week would end the withdrawal season a week earlier than last year and two weeks before the five-year average, according to department data.

Supplies were 52 percent above the five-year average in the week ended March 9, the biggest gap since May 2006.

Natural gas futures rose 0.2 cent to $2.326 per million British thermal units last week on the New York Mercantile Exchange, after sliding on March 13 to $2.204, the lowest intraday price since February 2002. Gas for April delivery fell 1.1 cents, or 0.5 percent, to $2.324 at 10:51 a.m.

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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