Natural Gas Futures Fall After Bigger-Than-Forecast Supply Gain

Natural gas futures slipped for a third day in New York after U.S. stockpiles expanded by more than forecast last week.

Inventories climbed 76 billion cubic feet in the week ended May 1 to 1.786 trillion, the Energy Information Administration said. Analyst estimates compiled by Bloomberg showed a gain of 74 billion while a survey of Bloomberg users predicted an increase of 73 billion.

Gas tumbled to a 34-month low last month as mild weather and rising production led to bigger-than-forecast storage injections. A supply deficit to the five-year average has narrowed to 3.6 percent from a record 55 percent in March 2014. Gas output may gain 5 percent to an all-time high this year, government data show.

“The storage number was more on the bearish side,” said Kent Bayazitoglu, an analyst at Gelber & Associates in Houston. “The fact that we’re seeing such strong injections shows that supply is still very strong and it’s not backing off.”

Natural gas for June delivery dropped 4.2 cents, or 1.5 percent, to settle at $2.734 per million British thermal units on the New York Mercantile Exchange. Volume was 15 percent above the 100-day average at 3:05 p.m. Prices have declined 5.4 percent this year.

The stockpile increase was bigger than the five-year average gain for the week of 68 billion cubic feet, according to the EIA, the Energy Department’s statistical arm. Supplies were 71 percent above year-earlier inventories, compared with 76.5 percent in last week’s report.

Storage Injection

“We may see a triple-digit number for storage next week,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “We’ve been chopping away at the deficit to the five-year average.”

Production from the Marcellus shale formation in the Northeast, the biggest reservoir by volume, will advance to 16.716 billion cubic feet a day in May, up 16 percent from a year earlier, the EIA said April 13 in its monthly Drilling Productivity Report.

The weather will be mostly normal in the central U.S. from May 12 through May 16, according to Commodity Weather Group LLC in Bethesda, Maryland.

The high in Cleveland on May 15 may be 64 degrees Fahrenheit (18 Celsius), 3 lower than average, AccuWeather Inc. said on its website. St. Louis temperatures may advance to 73 degrees on May 14, 3 below normal.

Power plants account for 32 percent of gas demand in the U.S., EIA data show.

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