Natural Gas Seen Dropping in Survey on Milder U.S. Weather

Natural gas futures may slide next week as moderate weather subdues demand for the power-plant fuel, a Bloomberg survey showed.

Nine of 13 analysts, or 69 percent, predicted that futures will decline on the New York Mercantile Exchange through May 24. Three, or 23 percent, said gas will advance and one said prices will stay the same. Last week, 57 percent of participants said gas would decline.

Above-normal temperatures in the U.S. this week will turn lower early next week with no significant heat surges anticipated, according to Commodity Weather Group LLC. Gas prices have tumbled 12 percent from a 21-month high on May 1 after two consecutive government reports showed above-average inventory gains.

“We have no extreme temperatures in the forecast so we are not going to need a lot of power generation,” said Gordy Elliott, a risk-management specialist at INTL FC Stone LLC in St. Louis Park, Minnesota. “We should have some bigger injections in the next three or four weeks and we should continue to see pressure in this market.”

Natural gas futures rose 2.2 cents, or 0.6 percent, to $3.932 per million British thermal units during the first four days of this week on the New York Mercantile Exchange, heading for the first gain in four weeks. Prices are up 17 percent this year.

Inventory Report

U.S. stockpiles increased by 99 billion cubic feet to 1.964 trillion in the week ended May 10, higher than the five-year average gain of 83 billion for the period, the Energy Information Administration said. Analyst estimates compiled by Bloomberg predicted an increase of 95 billion.

A supply deficit versus the historic norm narrowed for a second week, dropping to 4.1 percent from 5 percent, according to the EIA, the Energy Department’s statistical arm. A deficit versus year-earlier levels narrowed to 26.1 percent from 28.3 percent.

The gas survey has correctly forecast the direction of prices 50 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 gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

3 9 1

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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