Natural Gas Falls as Traders Brace for Late-Season Supply Gain

  • Stockpiles rose by 19 billion cubic feet in analyst survey
  • Midwest weather may be colder than normal in late November

The prospect of the biggest seasonal supply gain in six years sent U.S. natural gas futures lower for a second day.

Government data due Thursday will probably show gas stockpiles rose by 19 billion cubic feet last week, the largest increase for that period since 2009, based on the median of 14 analyst estimates compiled by Bloomberg. Mild weather has delayed withdrawals from storage this autumn.

“We already have a stockpile record, and that’s going to be extended,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The market is weighing the storage outlook against the weather forecasts, which are showing some days with below-normal temperatures.”

Natural gas for December delivery fell 2.4 cents to settle at $2.347 per million British thermal units on the New York Mercantile Exchange. Gas is down 19 percent this year.

The weather in the central U.S. may be colder than normal from Nov. 28 through Dec. 2, according to MDA Weather Services. The low in Chicago on Nov. 29 may be 21 degrees Fahrenheit (minus 6 Celsius), 7 less than usual, data from AccuWeather Inc. show. About 49 percent of U.S. households use gas for heating.

Gas Output

U.S. natural gas production may climb 6.3 percent this year to a record 79.61 billion cubic feet a day, according to the U.S. Energy Information Administration. Stockpiles may total 1.862 trillion cubic feet at the end of March, 240 billion above the five-year average, the EIA said.

"Increases in drilling efficiency will continue to support growing natural gas production in the forecast despite low natural gas prices and declining rig activity," the agency said Nov. 10 in its monthly Short-Term Energy Outlook report.

Most of the growth will come from the Marcellus shale formation in Appalachia as new pipelines deliver supplies to markets in the Northeast, the EIA said.

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