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Natural Gas Climbs After Below-Normal Inventory Gain

Natural gas futures pared gains in New York after a government report showed that U.S. stockpiles rose by more than the five-year average injection for last week.

Gas climbed as much as 2.2 percent. Inventories increased by 80 billion cubic feet in the week ended Sept. 21 to 3.576 trillion cubic feet, the Energy Department said today. The five-year average gain for the week is 76 billion.

“The 80 billion injection was a pretty good number,” said Gordy Elliott, a risk-management specialist at FC Stone LLC in St. Louis Park, Minnesota. “With mild temperatures ahead, we’re going to see considerable increases in stocks of natural gas.”

Natural gas for November delivery rose 1.3 cents, or 0.4 percent, to $3.228 per million British thermal units at 10:52 a.m. on the New York Mercantile Exchange. Gas traded at $3.26 before the storage number was released at 10:30 a.m. in Washington. The futures have advanced 8 percent this year.

Analyst estimates compiled by Bloomberg showed an expected gain of 78 billion cubic feet. A survey of Bloomberg users predicted an increase of 80 billion.

A surplus to the five-year average was unchanged from the previous week at 8.6 percent, the first time since March that supplies didn’t drop relative to the average.

Supplies were 9 percent above year-earlier inventories, compared with 10 percent in last week’s report.

Gas stockpiles may climb to a record 3.95 trillion cubic feet by the end of October, the Energy Department said Sept. 11 in its Short-Term Energy Outlook.

Normal Weather

The weather may be mostly normal or cooler-than-normal in the eastern half of the U.S. from Oct. 7 through Oct. 11, according to Commodity Weather Group in Bethesda, Maryland.

The high in New York on Oct. 9 may be 61 degrees Fahrenheit (16 Celsius), 5 below normal, according to AccuWeather Inc. in State College, Pennsylvania. The high in Chicago may be 62 degrees, 4 less than the usual reading.

Electricity producers account for about 36 percent of U.S. gas consumption, according to the Energy Department.

The U.S. raised its forecast for natural gas output in 2012 by 0.2 percent and lowered its outlook for prices, the department said in the Short-Term Energy Outlook. Marketed gas production will average 68.86 billion cubic feet a day this year, up from 68.72 billion estimated in August, the report showed. Output may rise 4 percent from last year’s record 66.22 billion cubic feet.

Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $2.65 per million British thermal units, below the previous forecast of $2.67, the data showed.

The surge in gas production from shale formations helped the U.S. meet 81 percent of its energy demand in 2011, the most since 1992, according to department data compiled by Bloomberg. Shale producers use a technique known as hydraulic fracturing, or fracking, which involves pumping water, sand and chemicals underground to extract gas embedded in the rock.

The number of rigs drilling for gas rose by six to 454 last week, according to data released Sept. 21 by Baker Hughes Inc. in Houston. The rig count is down 44 percent this year.

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