Natural Gas to Fall as Supplies Rise Before Winter, Survey Shows

Natural gas futures will decline next week as stockpiles rise toward an all-time high before the winter heating season begins, a Bloomberg survey showed.

Eight of 16 analysts, or 50 percent, forecast that futures on the New York Mercantile Exchange will drop through Oct. 12. Five, or 31 percent, said prices will increase and three said they will stay the same. Last week, 67 percent of participants said gas would fall through Oct. 5.

U.S. inventories totaled 3.653 trillion cubic feet last week, 8.3 percent above the five-year average for the period, the Energy Department said yesterday. The agency sees supplies expanding to a record by the end October, before the winter heating season. Midwest and West Coast temperatures will be above normal over the next 11 to 15 days, the National Weather Service said.

“The recent rally seemingly ignored the large amount of natural gas we have in storage,” Aaron Calder, senior market analyst at Gelber & Associates in Houston, said in a note to clients yesterday.

Gas use typically slackens after summer air-conditioning use drops off and before heating demand starts.

The increase in gas stockpiles of 77 billion cubic feet in the week ended Sept. 28 exceeded forecasts for a gain of 73 billion, based on 26 analyst estimates compiled by Bloomberg. The five-year average injection for the week is 78 billion. Inventories may rise to an all-time high of 3.95 trillion cubic feet by the end of this month, the Energy Department said in its Short-Term Energy Outlook on Sept. 11.

Gas has advanced 8.6 cents, or 2.6 percent, to $3.406 per million Btu so far this week on the Nymex. The futures are up 14 percent this year.

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

5 8 3

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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