Natural gas futures fell the most in 19 months, following declines in commodity markets, on a bigger-than-forecast U.S. inventories gain and concern that economic growth will ease.
Gas fell for a fourth day after the Energy Department said stockpiles increased 72 billion cubic feet in the week ended April 29 to 1.757 trillion cubic feet. Analyst estimates compiled by Bloomberg showed an expected gain of 67 billion. Gas’s loss accelerated along with oil as commodities dropped the most in 31 months.
“It’s a knee-jerk reaction to the worse-than-expected storage number,” said Peter Linder, president of the DeltaOne Energy Fund in Calgary. “And when people look at the oil complex, they just head for the hills.”
Natural gas for June delivery fell 31.6 cents, or 6.9 percent, to settle at $4.261 per million British thermal units on the New York Mercantile Exchange, the biggest percentage loss for a front-month contract since Oct. 1, 2009, and the lowest closing price since April 18.
The Standard & Poor’s GSCI Index of 24 raw materials fell 7.2 percent to 679.26 at 3:17 p.m., the biggest one-day drop since Oct. 10, 2008.
The five-year average gas inventory change for the week is an increase of 78 billion cubic feet, department data show. A separate storage survey of Bloomberg users showed an expected supply gain of 64 billion.
Stockpiles were 1 percent below five-year average levels for the week compared with a 0.6 percent deficit the previous week. Storage levels were down 11.4 percent from a year earlier, widening from 11.3 percent the previous week.
Gas extended losses as oil slumped after data showed that U.S. jobless claims rose last week and productivity of workers slowed in the first quarter. Crude for June delivery on the New York exchange fell 8.6 percent to $99.80 a barrel, settling below $100 for the first time since March 16.
“You are seeing a pretty widespread selling in commodities,” said Brad Florer, a trader at Kottke Associates LLC, an energy trading firm in Louisville, Kentucky. “Now everybody is trying to figure out where the support is.”
Also pushing commodities lower, the dollar climbed against the euro after European Central Bank President Jean-Claude Trichet said inflation risks will be watched “very closely,” signaling the ECB may wait until after June to raise rates.
A strengthening dollar makes commodities priced in the currency less attractive for investors.
Applications for jobless benefits gained 43,000 to 474,000 in the week ended April 30, the most since August, Labor Department figures showed today.
The measure of employee output per hour increased at a 1.6 percent annual rate after a 2.9 percent gain the prior three months, according to the department.
Gas dropped before the government released the inventory report as milder weather signaled reduced demand for the heating and power-plant fuel.
There will be no “sustained severe temperature extremes” in the next two weeks in the U.S., according to Commodity Weather Group LLC in Bethesda, Maryland.
The high temperature in New York on May 9 will be 68 degrees Fahrenheit (20 Celsius), 1 degree below normal, according to AccuWeather Inc. in State College, Pennsylvania.
Power plants use 30 percent of the nation’s gas supplies according to the Energy Department. Residential consumers account for about 20 percent.
U.S. nuclear-power output rose for a third day in a rebound from the lowest levels in almost 12 years. Some utilities turn to gas-fired power plants when nuclear production drops.
Nuclear-power output gained 0.1 percent from yesterday to 70,452 megawatts, or 69 percent of capacity, according to a Nuclear Regulatory Commission report today and data compiled by Bloomberg. Production fell to 68,248 megawatts on May 2, the lowest level since 1999.
Gas futures volume in electronic trading on the Nymex was 427,620 as of 2:48 p.m., compared with the three-month average of 321,000. Volume was 316,850 yesterday. Open interest was 1,004,801 contracts, rising to a record above 1 million for a second day. The three-month average open interest is 938,000.
The exchange has a one-business-day delay in reporting open interest and full volume data.