Natural gas futures fell to an 11-month low on speculation that supply will be ample as a slowing economic recovery reduces demand.
Prices fell for an eighth day after Commerce Department data showed the U.S. gross domestic product grew at a 1.6 percent annual rate in the second quarter, compared with a 2.4 percent estimate issued last month. U.S. gas inventories last week were 6.2 percent higher than the five-year average, the Energy Department said yesterday.
“There is no constructive news in the market right now,” said Teri Viswanath, a director of commodities research at Credit Suisse Securities USA in Houston. “People take a look at the level of the injections given the heat that we have, and they feel that there is going to be more-than-adequate storage to repair the balance.”
Natural gas for September delivery fell 16.6 cents, or 4.4 percent, to $3.651 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Sept. 22, 2009. The eight-day losing streak is the longest for a front-month contract since the nine days ended Aug. 18, 2009.
The futures dropped 11 percent this week, the biggest weekly decline since the period ended Jan. 29. The September contract expired today. Gas for October delivery fell 13.8 cents to $3.705 per million Btu.
The September contract’s expiration might have influenced trading today, Viswanath said.
Gas may rise next week, according to a technical analysis of the relative-strength index by Jay Levine, president of energy brokerage Enerjay LLC.
The 14-day relative-strength index stayed below 30 for a third day. Readings below 30 suggest prices will increase, while figures above 70 can be sell signals.
Gas inventory levels rose by 40 billion cubic feet in the week ended Aug. 20 to 3.052 trillion cubic feet, according to the Energy Department. Analyst estimates compiled by Bloomberg showed an increase of 38 billion, as did a separate survey of Bloomberg users.
“What pushes gas down is the supply side and the injection number yesterday was bearish,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant.
U.S. gas inventories at the end of October will reach 3.752 trillion cubic feet, the Energy Department said in its monthly Short-Term Energy Outlook on Aug. 10. Stockpiles rose to a record 3.837 trillion last November.
U.S. gas drilling rigs declined 12 to 973 this week, according to a report from Baker Hughes Inc. today. The total is 39 percent higher from a year earlier. Horizontal rigs, which are mostly used in drilling for shale gas, rose to a record 904.
Both Hurricane Danielle and Tropical Storm Earl are being deflected away from the U.S. by a low-pressure trough along the East Coast, according to Jim Rouiller, senior energy meteorologist at the commercial forecaster Planalytics Inc.
The National Hurricane Center said it’s tracking another storm, a “vigorous tropical wave” about 210 miles south-southeast of the Cape Verde islands. The system has a 70 percent chance of becoming a tropical cyclone in the next two days.
The National Oceanic and Atmospheric Administration earlier this month reduced its 2010 Atlantic hurricane forecast to 14 to 20 named storms from an earlier estimate of 14 to 23.
There will be a “strong heat surge for next week,” with temperatures in the eastern U.S. rising to the mid-90s Fahrenheit (mid-30s Celsius), according to Commodity Weather Group in Bethesda, Maryland. Later in the week, a cold front will sweep through the Midwest and East, the forecast showed.
Lowest Since April
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, fell 9.86 cents, or 2.6 percent, to $3.754 per million Btu on the Intercontinental Exchange, the lowest price since April 1.
Gas futures volume in electronic trading on the Nymex was 194,662 as of 2:37 p.m., compared with a three-month average of 262,000. Volume was 262,172 yesterday. Open interest was 823,041 contracts, compared with the three-month average of 808,000. The exchange has a one-business-day delay in reporting open interest and full volume data.