Natural Gas to Fall as U.S. Inventories Expand, Survey Says

Natural-gas futures will drop next week on speculation that a government report will show the biggest inventory increase in 11 months while moderating weather cuts fuel demand, a Bloomberg survey showed.

Five of 11 analysts, or 45 percent, forecast that futures on the New York Mercantile Exchange will decline through Sept. 28. Four, or 36 percent, said prices will stay the same and two said they will rise. Last week, 58 percent of participants said gas would decline through Sept. 21.

U.S. stockpiles may expand by about 80 billion cubic feet in the week ending Sept. 21, said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. That would be above the five-year average gain of 76 billion for the week and the biggest increase since the week ended Oct. 21, Energy Department data show.

“We are not quite to the heating season and this time of the year we cap off some pretty good builds,” said Gordy Elliott, a risk-management specialist at INTL FC Stone LLC in St. Louis Park, Minnesota. “I am a little negative here. We have comfortable weather. We are past the point where we have to generate a lot of electricity.”

Temperatures in much of the eastern U.S. were below average this week and will be normal or lower over the next 15 days, according to MDA EarthSat Weather in Gaithersburg, Maryland.

The high in Boston on Sept. 28 may be 58 degrees Fahrenheit (14 Celsius), 10 below normal, and Houston may be 5 below the usual reading at 81 degrees, according to AccuWeather Inc. in State College, Pennsylvania.

Electricity generators account for 36 percent of U.S. gas consumption, department data show.

Supply Report

Inventories in the week ended Sept. 14 rose by 67 billion cubic feet to 3.496 trillion, the Energy Department said yesterday. A surplus narrowed to 8.6 percent above the five-year average for the week, down from 61 percent at the end of March, as an unusually hot summer spurred demand from power plants.

Gas for October delivery fell 5.8 cents, or 2 percent, to $2.885 per million Btu this week on the New York exchange, the second decline in three weeks. Futures are down 3.5 percent this year.

The gas survey has correctly forecast the direction of prices 49 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 natural-gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

2 5 4

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

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.