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Natural Gas Advances After U.S. Inventories Fall to Two-Year Low

Natural gas rose from the highest settlement in more than three months in New York after a government report showed U.S. stockpiles last week fell to the lowest level in almost two years.

Futures advanced as much as 0.9 percent, gaining for a third day. Prices surged 3.6 percent yesterday, the biggest increase since Feb. 25, after the Energy Information Administration said inventories dropped 145 billion cubic feet last week to 1.938 trillion, the least since May 13, 2011. Analyst estimates compiled by Bloomberg showed an expected decline of 137 billion.

Gas for April delivery climbed as much as 3.3 cents to $3.845 per million British thermal units on the New York Mercantile Exchange and was at $3.829 at 10:13 a.m. Singapore time. Volume for all contracts was 26 percent lower than the 100-day average. Prices climbed 13.2 cents to settle at $3.812 per million Btu yesterday, the highest since Nov. 23. The fuel is up 14 percent this year.

The discount of April contracts to October, a gauge of summer demand for gas, settled at 14.5 cents yesterday, the narrowest differential since Oct. 19. It was at 13.6 cents today.

U.S. Stockpiles

The stockpile decrease was almost twice the five-year average decline for the week of 74 billion cubic feet, department data show. A surplus to the five-year average fell to 11.4 percent from 14.8 percent the previous week. Supplies were 18.5 percent below year-earlier inventories, compared with 14.8 percent last week.

Northern states will see below-normal temperatures through March 28, MDA Weather Services said. Gas futures have rallied 26 percent from a 2013 intraday low of $3.05 per million Btu on Jan. 2 as waves of unusually frigid weather spurred heating demand late in the heating season.

The low in Chicago on March 18 may be 22 degrees Fahrenheit (minus 6 Celsius), 10 below the usual reading, and two days later Boston may fall to 9 lower than usual at 23 degrees, according to AccuWeather Inc. in State College, Pennsylvania.

About 50 percent of U.S. households use gas for heating, according to the EIA, the Energy Department’s statistical arm. Gas demand typically slumps between the peak heating-demand season and before hot weather drives power demand to run air conditioners.

To contact the reporters on this story: Christine Buurma in New York at cbuurma1@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net

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

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