Natural Gas Drops in New York Before Report on U.S. Stockpiles

Natural gas futures fell in New York before a report predicted to show an above-average gain in U.S. stockpiles as warmer weather reduced demand for the heating and power-plant fuel.

Gas slid 1.2 percent, approaching the lowest level in a month. The Energy Information Administration release will show inventories rose by 86 billion cubic feet in the seven days to May 3, according to the median of 19 analyst estimates compiled by Bloomberg News. The five-year average supply gain for the period is 69 billion cubic feet, EIA data show. Gas fell the most in nine months on May 2 after the weekly report showed a larger-than-predicted injection.

“This is going to be a scary day,” Stephen Schork, president of Schork Group, an energy advisory company based in Villanova, Pennsylvania, said in an e-mailed research note. “For a second week in row, the template looks to favor another solid injection report.”

Next-month gas dropped 1.2 percent to $3.932 per million British thermal units at 5:16 a.m. on the New York Mercantile Exchange. It touched $3.895 yesterday, the least since April 4, after reaching an almost two-year high of $4.444 on May 1.

The mid-Atlantic states may see a brief surge of heat late this week and then again late next week, according to Commodity Weather Group LLC in Bethesda, Maryland. The forecaster sees above-normal temperatures from California to the Midwest from May 13 through May 22.

‘Additional Selling’

Gas futures have dropped 11 percent from a 21-month intraday high on May 1, falling below $4 per million British thermal units for the first time in a month, after last week’s supply increase came in above the median forecast.

“This is the lowest demand period that we are going into,” said Kyle Cooper, director of research with IAF Advisors in Houston. “That fact that we dropped below the $4 psychological level, you would expect to see a little bit of additional selling.”

Stockpile estimates compiled by Bloomberg range from increases of 72 billion to 94 billion cubic feet. The EIA, the statistical arm of the Energy Department, is scheduled to release its weekly gas inventory report at 10:30 a.m. today.

To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net; Naureen S. Malik in New York at nmalik28@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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