Natural Gas Futures Climb on Smaller-Than-Forecast Supply Gain

Natural gas futures advanced in New York for the third time this week after a government report showed a lower-than-forecast U.S. stockpile increase.

Gas rose 0.2 percent after the Energy Information Administration said inventories expanded by 46 billion cubic feet in the week ended Sept. 13 to 3.299 trillion cubic feet. Analyst estimates compiled by Bloomberg showed an expected gain of 55 billion.

“It was definitely a bullish number, reflecting some healthy demand for natural gas,” said Aaron Calder, an analyst at Gelber & Associates in Houston. “The heat we’ve had has really translated to increased consumption.”

Natural gas for October delivery rose 0.7 cent to settle at $3.72 per million British thermal units on the New York Mercantile Exchange. Volume was 94 percent above the 100-day average at 2:35 p.m. Prices have jumped 11 percent this year.

The discount of October to November futures narrowed 0.1 cent to 7.5 cents. October gas traded 33 cents below the January contract, compared with 32 cents yesterday.

October $3.65 puts were the most active options in electronic trading. They were 0.8 cent lower at 2.9 cents per million Btu on volume of 1,091 at 2:55 p.m. Puts accounted for 51 percent of trading volume. Implied volatility for November at-the-money options was 29.39 percent at 2:45 p.m., compared with 29.34 percent yesterday.

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Gas earlier jumped to $3.82 per million Btu, the highest intraday price since July 19, before retreating.

“There were a lot of people getting on the long side of the gas trade and there’s not much more room for the contract to run higher,” Calder said.

The stockpile increase was smaller than the five-year average gain for the week of 74 billion cubic feet, department data show. A surplus to the five-year average fell to 0.5 percent from 1.4 percent the previous week. Supplies were 5.4 percent below year-earlier inventories, compared with 5 percent last week.

“The data implies some tightening of the background supply/demand balance that could carry over into the weeks ahead,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York, in a note to clients today.

WSI Corp. in Andover, Massachusetts, said the weather may be warmer than normal in the central U.S. from Sept. 24 through Sept. 28.

Hotter Weather

The high in St. Louis on Sept. 26 may be 84 degrees Fahrenheit (29 Celsius), 7 more than usual, according to AccuWeather Inc. in State College, Pennsylvania. The high in Dallas may be 91 degrees, 6 above normal.

Power generation accounts for 32 percent of U.S. gas demand, according to the Energy Information Administration, the Energy Department’s statistical arm.

A low-pressure system over the southwestern Gulf of Mexico has a 60 percent chance of becoming a tropical depression in the next 48 hours, the National Hurricane Center in Miami said in a 2 p.m. outlook. The system may bring heavy rain to portions of eastern and southern Mexico.

An area of cloudiness and rain between the Bahamas and Bermuda has a 20 percent chance of becoming a subtropical cyclone in the next five days as it moves over the western Atlantic, the hurricane center said.

The Gulf of Mexico will account for 5.6 percent of U.S. gas production this year, EIA data show.

The U.S. met 87 percent of its own energy needs in the first five months of 2013, on pace to be the highest annual rate since 1986, according to EIA data.

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