Oct. 4 (Bloomberg) -- Natural gas futures fell to the lowest level in more than five weeks on speculation weak demand and a lack of storms in Gulf of Mexico production regions will boost a stockpile surplus.
Gas dropped as no major storms hit the Gulf in September, statistically the most active month of the hurricane season. Gas inventories were 6.3 percent above the five-year average in the week ended Sept. 24, according to the Energy Department, as mild weather reduced demand for gas for cooling and heating.
“We have fewer bullish fundamentals to stop the slide,” said Brad Florer, a trader at Kottke Associates Inc., an energy trading firm in Louisville, Kentucky. “Storms were not a situation as we close out the storm season, and we have plenty of gas.”
Natural gas for November delivery fell 7 cents, or 1.8 percent, to $3.727 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Aug. 27. Gas futures have fallen 33 percent this year.
Cool weather in the U.S. Northeast will “give way to much warmer weather” later this week and next week, according to MDA Federal Inc.’s EarthSat Energy Weather in Rockville, Maryland.
About 53 percent of U.S. households use natural gas for heating.
New York will have a high temperature of 71 degrees Fahrenheit (22 Celsius) on Oct. 9 and a low of 51, according to the National Weather Service. The city will have a high of 58 degrees today.
Caribbean Weather System
A weather system over the northeastern Caribbean has a 20 percent chance of becoming a tropical cyclone during the next 48 hours, the National Hurricane Center said in an advisory at 2 p.m. New York time. The system was moving west-northwest at about 10 miles (16 kilometers) per hour.
About 10 percent of U.S. gas output will come from federal waters in the Gulf this year, down from 17 percent five years ago, according to Energy Department estimates. Gulf production dropped 52 percent in the past 10 years.
Gas stockpiles rose 74 billion cubic feet in the week ended Sept. 24 to 3.414 trillion, the Energy Department said. The gain was above the five-year weekly average for a third week.
Excessive gas supply may continue through next year, keeping spot prices relatively low, GDF Suez SA Executive Vice President Jean-Marie Dauger said today at a conference in Paris.
Chesapeake Energy Corp., the second-biggest producer of U.S. natural gas, sold future output of the heating and power-plant fuel to a Barclays Plc affiliate, raising $1.15 billion to fund drilling and cut debt.
U.S. households’ natural gas bills may rise by about 7 percent this winter amid increased industrial demand for the fuel, the American Gas Association said today.
Hedge funds and other large speculators cut bullish bets on natural gas by 25 percent in the week ended Sept. 28, the most since August, according to the weekly Commitments of Traders report from the Commodity Futures Trading Commission.
Net-long positions in futures and options combined in four natural-gas contracts decreased by 17,373 futures equivalents to 51,306 in the week ended Sept. 28, the CFTC data showed.
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, dropped 10.5 cents, or 2.9 percent, to $3.5633 per million Btu on the Intercontinental Exchange.
Gas futures volume in electronic trading on the Nymex was 175,748 as of 2:36 p.m., compared with a three-month average of 257,000. Volume was 177,117 on Oct. 1. Open interest was 789,836 contracts, compared with the three-month average of 806,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
To contact the reporters on this story: Moming Zhou in New York at Mzhou29@bloomberg.net;
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