Natural Gas Futures Fall in Survey on Seasonal Demand Slump

Natural gas futures may decline next week on speculation that a seasonal slump will limit demand for the power-plant fuel.

Five of 12 analysts, or 42 percent, predicted that futures will fall on the New York Mercantile Exchange through Sept. 13. Four, or 33 percent, said gas will be little changed and three predicted prices will advance. Last week, 47 percent of participants said gas would decline.

The Northeast will see a push of cooler air through Sept. 9 that will clip the mid-Atlantic states and the Midwest, according to Commodity Weather Group LLC. The Bethesda-based forecaster said seasonal weather in Texas next week will spread to the east and west coasts from Sept. 15 through Sept. 19. An unusually hot end to August helped reduce the pace of gas stockpiling in recent weeks.

“We see prices coming under pressure once again next week as the build in inventories begins to accelerate,” Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York, said in an e-mail yesterday. “It appears that the inventory restocking during this year’s abbreviated shoulder season might offset the relatively undersized injections resulting from the late-breaking summer heat.”

Natural gas futures slid 5.1 cents, or 1.4 percent, to $3.53 per million British thermal units this week on the Nymex, the first weekly decline since Aug. 9. The futures are up 5.3 percent this year.

The Nymex trading floor was closed on Sept. 2 in observance of the U.S. Labor Day holiday.

Weather Outlook

The high temperature in Dallas on Sept. 16 may be 78 degrees Fahrenheit (26 Celsius), 11 lower than usual, according to AccuWeather Inc. in State College, Pennsylvania. Two days later, Boston’s reading may drop to 7 below average at 65 degrees. 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. inventories increased 58 billion cubic feet in the week ended Aug. 30 to 3.188 trillion, below the five-year average increase of 60 billion, the EIA said yesterday. Analyst estimates compiled by Bloomberg predicted a gain of 54 billion.

A supply surplus to the five-year average narrowed to 1.4 percent after holding at 1.5 percent for three weeks. A deficit versus year-earlier levels narrowed to 6.2 percent from 7 percent the previous 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

3 5 4

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE