Natural Gas Futures Fall in New York Before Inventory Report

Natural gas futures declined in New York before a report that may show a larger-than-average stockpile gain.

Gas fell as much as 1.4 percent as supplies may have risen 86 billion cubic feet in the week ended May 3, according to the median of 28 analyst estimates compiled by Bloomberg. The five-year average gain is 69 billion and last year’s addition was 30 billion, according to the Energy Information Administration, whose report is set for release at 10:30 a.m.

“If we get a surprisingly small injection, then the bulls will try to jack this market higher,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Natural gas fell 1.3 cents, or 0.3 percent, to $3.965 per million British thermal units at 9:48 a.m. on the New York Mercantile Exchange. Volume was 47 percent below the 100-day average for the time of day.

Today’s U.S. natural gas storage report is the most important of the year, as it may support last week’s data that sent prices down by the most in nine months, according to Schork Group Inc.

“This is going to be a scary day,” Stephen Schork, president of Schork Group, an energy-advisory company based in Villanova, Pennsylvania, said in an e-mailed report. “For a second week in row, the template looks to favor another solid injection report.”

Investors poured into natural gas this year as futures gained 18 percent after the coldest March in 11 years boosted heating demand and eliminated a supply surplus.

Bullish Bets

Hedge funds and other large speculators increased bullish bets on four natural gas contracts to a record 456,475 futures equivalents in the week ended April 30, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report on May 3. It was a record in data going back to January 2010.

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.

Futures fell to a decade low of $1.902 per million Btu in April 2012 amid record production and mild winter weather that reduced fuel demand. Supplies grew to an all-time high of 3.929 trillion cubic feet in November, EIA data show.

Horizontal drilling and hydraulic fracturing, or fracking, have boosted output from shale plays such as the Marcellus in the Northeast and the Eagle Ford in Texas. Increased oil and gas drilling helped the U.S. meet 84 percent of its energy needs last year, the highest level since 1991, EIA data show.

Marketed gas production will rise to 69.9 billion cubic feet a day in 2013 from 69.18 billion last year, the EIA said May 7 in its Short-Term Energy Outlook. Consumption will increase to 70.17 billion cubic feet a day from 69.68 billion.

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