Natural Gas Futures Fall in Survey As Fuel Demand Slumps

Natural gas futures may drop next week as waning summer heat limits demand for the power-plant fuel to run air conditioners.

Seven of 14 analysts, or 50 percent, predicted that futures will decline on the New York Mercantile Exchange through Sept. 20. Six, or 43 percent, said gas will increase and one predicted prices will stay the same. Last week, 42 percent of participants said gas would fall.

Warmer-than-normal weather may linger in the Midwest next week but temperatures won’t top 90 degrees Fahrenheit (32 Celsius) as they did this week from New York to Chicago, said Commodity Weather Group LLC in Bethesda, Maryland. Gas is trading at a 20-cent premium to coal when adjusted to British thermal units, said Aaron Calder, senior market analyst at Gelber & Associates in Houston.

“As we move into the more mild temperatures in the fall, power generators will have more flexibility to choose between the two fuels,” Calder said. “They will choose the cheaper fuel, forcing natural gas to go lower to compete for market share.”

Natural gas futures gained 14.7 cents, or 4.2 percent, to $3.677 per million British thermal units this week on the Nymex, advancing for the fourth time in five weeks. The futures are up 9.7 percent this year.

Inventory Report

Prices jumped 2 percent yesterday after the Energy Information Administration reported inventories rose by 65 billion cubic feet to 3.253 trillion cubic feet in the week ended Sept. 6. Analyst estimates compiled by Bloomberg predicted a gain of 68 billion. The five-year average increase for the period was 62 billion.

The high temperature in New York City and Chicago on Sept. 17 may be 72 degrees, 3 below normal for both cities, said AccuWeather Inc. in State College, Pennsylvania. Power producers account for 32 percent of U.S. gas demand, according to the Energy Information Administration, the Energy Department’s statistical arm.

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

6 7 1

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