Natural Gas Futures Gain in Survey as U.S. Weather Heats Up

Natural gas futures may climb next week for the third consecutive time on forecasts for hotter weather that signal increased demand for the power-plant fuel, a Bloomberg survey showed.

Five of 11 analysts, or 45 percent, predicted that futures will gain on the New York Mercantile Exchange through May 31. Four, or 36 percent, said gas will decline and two said prices will stay the same. Last week, 69 percent of participants said gas would decline.

Mild weather in the eastern U.S. will give way to above-normal readings from May 28 through June 1, according to MDA Weather Services in Gaithersburg, Maryland. The heat may then sweep across most of the lower 48 states through June 6. Gas prices rose to a three-week high yesterday after government data showed the first below-average stockpile gain since April 26.

’’You have weather forecasts for the heat to come in at the back end of the forecast and that’s almost exactly when a flip from below-normal to above-normal would indeed be bullish,’’ said Kyle Cooper, director of research at IAF Advisors in Houston. ’’To continue to move higher, you have to have the 11-to 15-day forecast stay hot.’’

The high in New York City on May 31 may be 86 degrees Fahrenheit (30 Celsius), 11 above normal, according to AccuWeather Inc. Washington may reach 89, 9 higher than usual. Power plants will account for 32 percent of U.S. gas consumption this year, Energy Information Administration data show.

Week’s Performance

Natural gas futures rose 20.6 cents, or 5.1 percent, to $4.261 per million British thermal units during the first four days of this week on the New York Mercantile Exchange, heading for the second consecutive weekly increase. Prices are up 27 percent this year.

U.S. stockpiles expanded by 89 billion cubic feet to 2.053 trillion in the week ended May 17, below than the five-year average gain of 90 billion for the period, the EIA said. Analyst estimates compiled by Bloomberg predicted an increase of 92 billion.

A supply deficit versus the historic norm narrowed for a third week, dropping to 3.9 percent from 4.1 percent the previous period, according to the EIA, the Energy Department’s statistical arm. A deficit versus year-earlier levels narrowed for a sixth week to 24.9 percent from 26.1 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

5 4 2

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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