Natural Gas Futures Drop in Survey on Seasonal Demand Lull

Natural gas futures may drop next week on lackluster demand during a seasonal lull before the peak U.S. heating season, a Bloomberg survey showed.

Nine of 14 analysts, or 64 percent, predicted that futures will fall on the New York Mercantile Exchange through Oct. 11. Four, or 29 percent, said gas will gain and one predicted prices will stay the same. Last week, 55 percent of participants said gas would decline.

Temperatures will be warmer than normal from the Northeast through the Ohio Valley next week while the rest of the lower 48 states will see seasonal or cooler weather, according to Commodity Weather Group LLC in Bethesda, Maryland. U.S. gas stockpile gains exceeded the five-year averages over the past two weeks as demand for the power-plant fuel slumped.

“It’s still going to be mild and we are expecting large injections for the next two weeks,” said Aaron Calder, senior market analyst at Gelber & Associates in Houston. “The market is oversupplied.”

Natural gas futures dropped 8.3 cents, or 2.3 percent, to $3.506 per million British thermal units this week on the Nymex. The futures are up 4.6 percent this year.

The high in New York City on Oct. 9 may be 71 degrees Fahrenheit (22 Celsius), 5 above normal, after topping the 80s this week, according to 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.

Stockpile Report

U.S. inventories rose 101 billion cubic feet to 3.487 trillion cubic feet in the week ended Sept. 27, the biggest gain for any week since May 31, according to the EIA. Analyst estimates compiled by Bloomberg predicted a gain of 95 billion. The five-year average increase for the period was 82 billion.

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

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