July 11 (Bloomberg) -- Natural gas dropped in New York for the second time in three days on speculation that a government report may show an above-average U.S. stockpile gain.
Gas fell as much as 1.5 percent. The Energy Information Administration may say inventories expanded by 82 billion cubic feet last week, based on the median of 23 analyst estimates compiled by Bloomberg. The five-year average increase for the period is 74 billion.
“The number has been bigger than the five-year average for five reports and the market is expecting it could happen again,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “That’s probably not good for the upside.”
Natural gas for August delivery fell 1.2 cents, or 0.3 percent, to $3.668 per million British thermal units at 10 a.m. on the New York Mercantile Exchange. Trading volume was 51 percent below the 100-day average. Prices have climbed 9.5 percent this year.
The discount of August to October futures was unchanged at 1.7 cents.
September $3.40 puts were the most active options in electronic trading. They were 0.4 cent higher at 6.1 cents per million Btu on volume 535 at 10:02 a.m. Puts accounted for 77 percent of trading volume. Implied volatility for at-the-money options expiring in August was 31.02 percent at 10 a.m., compared with 30.44 percent yesterday.
The EIA, the Energy Department’s statistical arm, is scheduled to release its weekly gas report at 10:30 a.m. in Washington.
Gas futures have tumbled 17 percent from a 21-month high of $4.444 per million Btu reached on May 1 as mild weather reduced demand for the power plant fuel, contributing to above-normal weekly supply gains.
Gas inventories totaled 2.605 trillion cubic feet in the week ended June 28, 1.1 percent below the five-year average for the period, the EIA said July 3. The deficit to the average has narrowed from 6.2 percent on April 26. A deficit versus year-earlier levels dropped to 15.9 percent from 30.9 percent during the same period.
The forecast turned hotter for the Northeast next week, with above-normal temperatures sweeping across most of the lower 48 states, barring the Southeast, according to MDA Weather Services in Gaithersburg, Maryland.
The high in Philadelphia on July 18 may be 93 degrees Fahrenheit (34 Celsius), 6 higher than the usual reading, data from AccuWeather Inc. in State College, Pennsylvania, show.
Power generation accounts for 32 percent of U.S. gas demand, according to the EIA, the Energy Department’s statistical arm.
Pressure on gas prices may build as the 50-day moving average, which has been sloping downward since the beginning of June, crosses below the 100-day and 200-day moving averages, Yawger said
“If the 50-day crosses over the 100-day and we are 20 cents from crossing the 200-day, that’s a very bearish indicator when that happens,” Yawger said. It will take a couple of days to close the gap between the 50-day and 200-day averages, he said.
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