Natural Gas Futures Gain in Survey on Hot Weather OutlookNaureen S. Malik
Natural gas futures may advance next week for the first time in four weeks as hotter U.S. weather spurs demand for the power-plant fuel to run air conditioners, a Bloomberg survey showed.
Seven of 13 analysts, or 54 percent, predicted that futures will gain on the New York Mercantile Exchange through June 21. Five, or 38 percent, said gas will decline and one said prices will stay the same. Last week, 58 percent of participants said gas would drop.
Temperatures will be above normal across the central U.S. from June 18 through June 22 before the heat spreads to the Northeast and West Coast over the next five days, according to MDA Weather Services in Gaithersburg, Maryland. Gas prices fell to a three-month low this week as mild weather reduced fuel use.
“After this week’s consolidation, we see prices moving higher as the build in cooling demand begins to weigh in on storage restocking,” Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York, said in an e-mail yesterday.
Natural gas futures fell 9.5 cents, or 2.5 percent, to $3.733 per million British thermal units this week on the Nymex, capping the third consecutive weekly decline. Prices dropped to $3.71 on June 12, the lowest intraday level since March 14. The futures are up 11 percent this year.
The high in Dallas every day next week may be 96 degrees Fahrenheit (36 Celsius), 3 to 4 degrees above normal, according to AccuWeather Inc. in State College, Pennsylvania. New York’s high on June 18 may be 84 degrees, 4 above normal.
Power plants will account for 32 percent of U.S. gas consumption this year, according to the Energy Information Administration.
Gas inventories expanded by 95 billion cubic feet to 2.347 trillion in the week ended June 7, above the five-year average gain for the period of 84 billion, EIA data show.
A deficit versus the historic norm narrowed to 2.4 percent from 3 percent the previous week. Supplies were 20 percent below year-earlier levels versus 21.5 percent in the previous report, narrowing for the ninth straight week.
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
7 5 1