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Natural Gas Futures Drop in Survey as Summer Demand Tapers

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Sept. 20 (Bloomberg) -- Natural gas futures may fall next week as mild weather reduces demand for the power-plant fuel.

Seven of 14 analysts, or 50 percent, predicted that futures will decline on the New York Mercantile Exchange through Sept. 27. Four, or 29 percent, said gas will advance and three predicted prices will stay the same. Last week, 50 percent of participants said gas would drop.

The East Coast will have seasonal temperatures next week while the central U.S. is above normal, said Commodity Weather Group LLC in Bethesda, Maryland. Gas inventories last week fell below year-earlier levels for the first time since April after a surge of heat.

“For the next three to four weeks inventories are going to be relatively robust,” said Kyle Cooper, director of research with IAF Advisors in Houston. “After that, you are going to see injections drop off very, very quickly.”

Natural gas futures rose 1 cent, or 0.3 percent, to $3.687 per million British thermal units this week on the Nymex, capping the fifth gain in six weeks. The futures are up 10 percent this year.

The high temperature in Boston on Sept. 23 may be 65 degrees Fahrenheit (18 Celsius), 5 below normal, and Washington may be 3 lower than average at 74, said AccuWeather Inc. in State College, Pennsylvania. Readings from the East Coast to the Midwest topped the 90s last week.

Power producers account for 32 percent of U.S. gas demand, according to the Energy Information Administration, the Energy Department’s statistical arm.

U.S. Stockpiles

U.S. inventories increased by 46 billion cubic feet to 3.299 trillion cubic feet in the week ended Sept. 13, the smallest gain ever for that time of the year based on EIA records going back to 1994. Analyst estimates compiled by Bloomberg predicted a gain of 55 billion. The supply increase a year earlier was 61 billion and the five-year average increase for the period was 74 billion.

The gas survey has correctly forecast the direction of prices 50 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 gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

4 7 3

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net;

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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