Natural Gas Drops to 5-Month Low on Above-Forecast Supply Gain
Natural gas futures slid to a five-month low in New York after U.S. stockpiles increased more than forecast last week.
Gas dropped as much as 3.1 percent after the Energy Information Administration said supplies rose 59 billion cubic feet in the week ended July 26 to 2.845 trillion. Analyst estimates compiled by Bloomberg showed a gain of 56 billion. Commodity Weather Group LLC said the weather may mostly cooler than average in the eastern U.S. through Aug. 15.
“The number was just a touch above expectations and we have a few bearish factors weighing down the market,” said Kent Bayazitoglu, an analyst at Gelber & Associates in Houston. “We’re on track for a mild August. The summer has not panned out in terms of cooling demand.”
Natural gas for September delivery fell 6.2 cents, or 1.8 percent, to $3.384 per million British thermal units at 1:52 p.m. on the New York Mercantile Exchange and dropped to $3.341, the lowest intraday price since Feb. 25. Volume was 2.2 percent above the 100-day average. The futures have gained 1 percent this year.
The stockpile increase was bigger than the five-year average gain for the week of 47 billion cubic feet, department data show. A deficit to the five-year average narrowed to 1.2 percent from 1.6 percent the previous week. Supplies were 11.5 percent below year-earlier inventories, compared with 12.5 percent in last week’s report.
The high in New York on Aug. 8 may be 82 degrees Fahrenheit (28 Celsius), 2 lower than usual, according to AccuWeather Inc. in State College, Pennsylvania. The high in Chicago that day may be 77 degrees, 6 less than average, AccuWeather data show.
Power generation accounts for 32 percent of U.S. gas demand, according to the EIA, the Energy Department’s statistical arm.
Proved reserves of wet natural gas rose by 31.2 trillion cubic feet in 2011 to a record 348.8 trillion cubic feet, the EIA said today on its website.
“Horizontal drilling and hydraulic fracturing in shale and other ‘tight’ (very low permeability) formations continued to drive record increases in proved oil and lease condensate and natural gas reserves in 2011,” the EIA said.
Lower-48-state natural gas output was little changed in May as new wells began operating in the Northeast’s Marcellus shale formation while Wyoming production declined during scheduled maintenance, the EIA said in a report yesterday.
Production in the contiguous states totaled 73.37 billion cubic feet a day, compared with a revised 73.38 billion in April, the agency’s monthly EIA-914 report.
The U.S. met 87 percent of its own energy needs in the first four months of 2013, on pace to be the highest annual rate since 1985, according to EIA data.
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