Faster-than-expected gains in U.S. natural-gas inventories are easing concern that a shortage is looming next winter, spurring speculators to cut bullish bets.
Money managers’ net-long position fell 9.1 percent in the week ended May 13 to the lowest level since December, the U.S. Commodity Futures Trading Commission said. Bearish wagers are the highest in more than four months.
Gas futures fell 9.2 percent in the period as stockpile gains topped analysts’ forecasts for a third week. Production from shale deposits in the U.S. Northeast and Midwest climbed to a record 16.1 billion cubic feet a day in the week ended May 9, Credit Suisse Group AG said in a report May 15.
“We’re on the path to a more comfortable supply situation by the end of the summer,” Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami, said by phone on May 16. “That’s giving the bears a little bit of ammunition.”
Natural gas slid 44.1 cents to $4.358 per million British thermal units on the New York Mercantile Exchange in the week ended May 13. Prices fell to $4.289 on May 15, a six-week low, and rose 1.3 percent today to settle at $4.47 in New York.
The Energy Information Administration said inventories rose 74 billion cubic feet in the week ended May 2. Analysts predicted an increase of 70 billion. Supplies climbed by 105 billion the following week, narrowing the deficit to the five-year average to the least since Feb. 28.
“We’ve had consecutive bearish surprises in the storage numbers,” Tim Evans, an energy analyst at Citi Futures in New York, said by phone on May 16. “There’s a risk that we’ll continue to probe the downside in the weeks ahead.”
Output from shale formations will lead to a record increase in stockpiles through the end of October, when heating demand kicks in, Goldman Sachs Group Inc. said.
“We still expect supply growth in 2014 and 2015 to continue to outpace demand,” Jeffrey Currie, the head of commodities research at Goldman in New York, said in a May 16 note to clients.
In other markets, hedge funds and other large speculators increased bullish crude oil wagers by 11,652 futures and options combined, or 3.9 percent, to 311,195.
WTI crude advanced 2.2 percent to $101.70 a barrel on the Nymex in the week covered by the report and ended at $102.61 today after settling at $102.02 on May 16. Oil climbed 1.3 percent on May 7 after crude supplies at Cushing, Oklahoma, the delivery point for U.S. futures, dropped to the lowest level in more than five years.
Net-long positions in gasoline slid by 10,170 futures and options combined, or 14 percent, to 60,723, the CFTC report showed. Futures climbed 1.5 percent to settle at $2.9302 a gallon on the Nymex in the week covered by the report.
Gasoline at U.S. pumps, averaged nationwide, dropped 0.1 cent to $3.646 a gallon on May 17, according to data from Heathrow, Florida-based AAA, the nation’s largest motoring group. Prices were 0.6 cent higher than a year earlier.
Money managers’ bets on ultra low sulfur diesel advanced by 1,051, or 4.4 percent, to 24,974 futures and options combined, the CFTC report showed. Futures rose 1.9 percent to $2.944 a gallon in the week covered by the report and settled at $2.9536 a gallon on May 16.
The number of rigs drilling for natural gas in the U.S. climbed by three to 326 last week, according Baker Hughes Inc., a Houston-based field services company.
U.S. marketed gas output will increase 3 percent to average 72.26 billion cubic feet a day this year, an all-time high, EIA projections show.
Net-long positions on four U.S. natural gas contracts held by money managers dropped by 35,222 futures equivalents to 351,116 in the week ended May 13, falling for a third week, according to the CFTC. Long positions decreased by 5.1 percent, while bearish bets gained 3,955 to 230,883.
The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Futures U.S. Henry Hub contract. Henry Hub, in Erath, Louisiana, is the delivery point for Nymex futures, a benchmark price for the fuel.
“Gas prices can fall below $4 this summer if we see enough inventory injections that are above the five-year average,” FCStone’s Saal said. “We’re going to get some more triple-digit storage increases over the next few weeks.”