Natural Gas Futures Rise on Bigger-Than-Forecast Supply Drop

Natural gas futures climbed for the second time in three days after a government report showed that U.S. stockpiles dropped by more than forecast last week, depleting supplies already at an 11-year low.

Gas gained as much as 2.2 percent after the Energy Information Administration said inventories fell 57 billion cubic feet in the week ended March 21 to 896 billion, the lowest since 2003. Analyst estimates compiled by Bloomberg showed a withdrawal of 52 billion. A survey of Bloomberg users predicted a decrease of 51 billion. The futures rose to a five-year high in February as below-normal temperatures stoked demand for the heating fuel.

“The number was bigger than expectations,” said Kent Bayazitoglu, an analyst at Gelber & Associates in Houston. “We’re not quite out of the woods yet in terms of more storage withdrawals to come. The market could see some additional tightness.”

Natural gas for April delivery rose 6.9 cents, or 1.6 percent, to $4.471 per million British thermal units at 10:32 a.m. on the New York Mercantile Exchange. Gas traded at $4.43 before the storage number was released at 10:30 a.m. in Washington. Volume was 60 percent below the 100-day average. Prices are up 5.7 percent this year.

April futures expire today. The more actively traded May contract rose 6.7 cents to $4.462.

Above Average

The stockpile decrease was bigger than the five-year average decline for the week of 7 billion cubic feet, department data show. A deficit to the five-year average widened to a record 50.8 percent from 47.9 percent the previous week. Supplies were 50.1 percent below year-earlier inventories, compared with 49.4 percent in last week’s report.

MDA Weather Services in Gaithersburg, Maryland, predicted below-normal temperatures in parts of the Northeast and Midwest through April 5.

The low in New York on April 1 may be 38 degrees Fahrenheit (3 Celsius), 2 less than average, according to AccuWeather Inc. in State College, Pennsylvania. Chicago temperatures may fall to 30 degrees, 6 lower than usual.

About 49 percent of U.S. households use gas for heating, with the biggest share in the Midwest, EIA data show.

Commodity Weather Group LLC in Bethesda, Maryland, said December through February was the coldest for that period in the lower-48 states since the winter of 1981-1982, based on energy-weighted heating degree days, a measure of weather-driven demand.

Gross gas production in the lower-48 states slipped 1.5 percent to 74.8 billion cubic feet a day in December from a revised 75.97 billion in November, the EIA said Feb. 28 in its monthly EIA-914 report. Output in Texas, Oklahoma and New Mexico declined as freezing weather caused shut-ins. The next report is scheduled for release on March 31.

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

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Bill Banker, Richard Stubbe

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