Natural Gas Slides as Fuel Stockpiling to Speed UpNaureen S. Malik
Natural gas rose in New York for the first time in three days as lingering heat may boost demand for the power-plant fuel to run air conditioners.
Below-normal temperatures on the East Coast over the next five days will give way to unusually warm readings from Sept. 27 through Oct. 7, according to MDA Weather Services. The high in Washington on Oct. 2 may be 83 degrees Fahrenheit (28 Celsius), 10 above normal, according to AccuWeather Inc.
“We are rebounding a little bit because of the weather,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “When it gets into the 80s, people will turn on their air conditioners. It isn’t wildly bullish or bearish, but you don’t expect to see this late in the season.”
Natural gas for October delivery rose 1.3 cents, or 0.3 percent, to settle at $3.85 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 2.5 percent below the 100-day average at 3:19 p.m. The futures have climbed 4.4 percent from a year ago.
“The market is really stuck in the $3.75 and $4 range and we are at the lower end of that,” said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston. “Weather-generated demand is just not likely enough in the next couple of weeks to break out.”
The forecasts for the heat next week was stronger in today’s outlook, said MDA in Gaithersburg, Maryland. The high in Kansas City on Sept. 26 will be 81, 5 above normal, before dropping a week later to a seasonal 73, according to AccuWeather in State College, Pennsylvania. Power plants account for 31 percent of U.S. gas consumption, government data show.
Gas flows into storage caverns have climbed 2.069 trillion cubic feet since March to 2.891 trillion on Sept. 12, the biggest gain for the period in U.S. Energy Information Administration data going back to 1994. A supply deficit to the five-year average has narrowed to 13 percent from a record 55 percent during the period.
“The deficit is still large enough to provide some price support, but it is obviously ebbing,” John Kilduff, partner at Again Capital LLC and editor of the Energy OverView newsletter in New York, wrote today. He sees prices dropping as the deficit narrows.
Kilduff estimates that gas inventories expanded by 99 billion cubic feet last week. The five-year average for the period is 79 billion. The EIA is scheduled to release its weekly report on Sept. 25.
Money managers reduced bullish wagers to a 10-month low last week, U.S. Commodity Futures Trading Commission data show. Net-long positions fell by 7,335 futures equivalents, or 6.3 percent, to 108,651 in the week ended Sept. 16, dropping for the 19th time in 21 weeks.