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Natural Gas May Drop as Blackouts Cut Demnad, Survey Shows

Natural gas futures may slide next week as blackouts caused by Sandy and moderating weather limit demand for the power-plant and heating fuel, a Bloomberg News survey showed.

Nine of 17 analysts, or 53 percent, forecast that futures will decline on the New York Mercantile Exchange through Nov. 9. Four, or 24 percent, said gas will fall and four said prices will stay the same. Last week, 43 percent of participants said gas prices would rise this week.

Sandy, the Atlantic superstorm that made landfall in southern New Jersey on Oct. 29, caused unprecedented strain on regional power demand by bombarding the grids with hours of wind, rain and high water. Cold weather drawn into the eastern U.S. will moderate over the next six to 14 days, according to the National Weather Service. U.S. gas stockpiles also advanced to a record last week.

“If you continue to see demand destruction from the effects of Sandy, your injections will be relatively high unless the weather turns relatively cold,” said Kyle Cooper, director of commodities research at IAF Advisors, a Houston consulting firm. “As those temperatures moderate, you are going to see dropping demand overall.”

Natural gas for December delivery advanced 15.4 cents, or 4.5 percent, to $3.554 per million British thermal units this week on the New York exchange. Gas is up 19 percent this year.

Power Out

About 3.63 million people were without power in the eastern U.S. because of Sandy as of 9 a.m. today, down from as many as 8.2 million earlier this week, the Energy Department said.

The low in New York City on Nov. 12 may be 52 degrees Fahrenheit (11 Celsius), 9 above the usual reading, according to AccuWeather Inc. in State College, Pennsylvania. The low in Minneapolis may be 30 degrees, 3 below than the usual reading. Washington may be 3 above normal at 42 degrees.

About 50 percent of U.S. households use gas for heating while power generators account for 36 percent of total gas consumption in the nation, according to the Energy Department.

U.S. gas stockpiles rose by 65 billion cubic feet to 3.908 trillion in the week ended Oct. 26, an all-time high based on data going back to 1993, the department reported yesterday.

Cooper said he expects to see supplies expand in the department’s next two weekly storage reports before seasonal heating demand picks up.

The gas survey has correctly forecast the direction of prices 49 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex natural-gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:


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