Natural Gas Climbs on Outlook for Below-Normal Storage Gain

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Natural gas futures headed for a weekly gain in New York on speculation that government data will show a below-normal increase in gas stockpiles.

An Energy Information Administration report scheduled for release at 10:30 a.m. in Washington may show supplies rose by 71 billion cubic feet in the seven days ended June 26, compared with the five-year average gain of 75 billion, according to the median of 18 analyst estimates compiled by Bloomberg. Temperatures averaged above normal in New York last week, data from AccuWeather Inc. show.

“The estimates for the storage report are pretty low, which is reflective of the heat we had last week,” said Phil Flynn, a senior market analyst at Price Futures Group in Chicago. “Traders have to be ready for a potential bullish surprise.”

Natural gas for August delivery rose 4.8 cents, or 1.7 percent, to $2.831 per million British thermal units at 9:44 a.m. on the New York Mercantile Exchange. Volume for all futures traded was 16 percent below the 100-day average. Gas has advanced 2.1 percent this week.

CME Group Inc.’s New York trading floor will be closed Friday for the Independence Day holiday, and the Globex electronic trading platform will close at 1 p.m. New York time. The New York gas pit is scheduled to shut permanently on Monday.

Gas Deliveries

Gas deliveries to power plants were up 2.9 percent from a year ago through Wednesday, according to LCI Energy Insight in El Paso, Texas. Electricity generators account for 33 percent of gas demand in the U.S., EIA data show.

Gas output from Pennsylvania, which includes the Marcellus shale reservoir, fell 2 percent in April to 13.13 billion cubic feet a day from March, the EIA said June 30 in its monthly EIA-914 report. Production from the seven largest shale reservoirs in the U.S. will decline by 221 million cubic feet a day to 45.6 billion in July from June, the agency said June 8 in its monthly Drilling Productivity Report.

The U.S. cut its estimate for 2015 marketed gas production to 78.96 billion cubic feet a day from the 79.22 billion forecast in May, according to the EIA’s monthly Short-Term Energy Outlook on June 9. Output may climb 5.7 percent from 2014.

Demand for the fuel may rise 4.4 percent in 2015, driven by industrial users and power plants, the EIA said. Power plants’ consumption may advance 14 percent amid low prices.

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