Natural Gas Climbs to Eight-Week High on Stockpile Forecasts

Natural gas futures advanced to an eight-week high in New York on speculation that government data this week will show a below-normal gain in inventories of the power-plant fuel.

Gas climbed before a Sept. 19 report from the Energy Department’s Energy Information Administration that may show stockpiles rose by 59 billion cubic feet in the week ended Sept. 13, compared with the five-year average gain of 74 billion, according to the median of five analyst estimates compiled by Bloomberg.

“Traders are expecting a smaller-than-average storage injection and that’s been supportive for prices,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market continues to try to push higher.”

Natural gas for October delivery rose 0.7 cent to $3.745 per million British thermal units on the New York Mercantile Exchange, the highest settlement since July 19. Trading volume was 13 percent above the 100-day average at 2:38 p.m. Prices are up 12 percent this year.

The discount of October to November futures widened 0.1 cent to 7.7 cents. October gas traded 30.9 cents below the January contract, compared with 30.3 cents yesterday.

October $3.50 puts were the most active options in electronic trading. They were 0.2 cent lower at 0.6 cent per million Btu on volume of 598 at 2:50 p.m. Puts accounted for 34 percent of trading volume. Implied volatility for October at-the-money options was 29.06 percent at 2:45 p.m., compared with 29.12 percent yesterday

Gas Stockpiles

Gas inventories totaled 3.253 trillion cubic feet in the week ended Sept. 6, 1.4 percent above the five-year average and 5 percent below year-earlier supplies, EIA data show.

MDA Weather Services in Gaithersburg, Maryland, said the weather may be warmer than normal in most of the lower-48 states through Oct. 1.

The high in Chicago on Sept. 19 may be 85 degrees Fahrenheit (29 Celsius), 11 more than usual, according to AccuWeather Inc. in State College, Pennsylvania. The high in Houston may be 91 degrees, 3 above normal.

Power generation accounts for 32 percent of U.S. gas demand, according to the Energy Information Administration, the Energy Department’s statistical arm.

An area of low pressure over Belize and the southern Yucatan Peninsula may drift over the southwestern Gulf of Mexico in the next several days, the National Hurricane Center in Miami said in a 2 p.m. outlook. The system has a 60 percent chance of becoming a tropical cyclone during the next five days.

The Gulf of Mexico will account for 5.6 percent of U.S. gas production this year, EIA data show.

The U.S. met 87 percent of its own energy needs in the first five months of 2013, on pace to be the highest annual rate since 1986, the agency said.

To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net;

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

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