U.S. Gas Bulls Keep Faith in Anticipation of Falling Supply Glutby
The U.S. natural gas inventory report showed a historic decline for last week, which the market all but ignored. Yet bulls say prices may still push higher before summer is out.
Nine of 15 traders and analysts expect futures to advance, according to a Bloomberg News survey. Another four see prices retreating and the rest expect prices to hold steady.
The U.S. Energy Information Administration reported Thursday that gas inventories fell by 6 billion cubic feet last week, making it only the third time on record that has happened during the summer stockpiling season. Power plants burned a record amount of gas as a heat wave hit East Coast cities including Washington and New York. Even though the draw may have been a blip, it’s part of a broader trend where below-average storage injections have slashed a stockpile glut week after week.
“If we continue this trend we could end the refill season below average, and with the retirement of many coal plants a cold winter could leave us vulnerable to big-time winter price spikes if we get real cold weather,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said in an e-mail. “The way things are going, you better get out some sweaters because the era of low natural gas prices may be coming to an end.”
Gas futures have slipped 2.7 cents, or 0.9 percent, so far this week to $2.849 per million British thermal units at 1:55 p.m. Thursday on the New York Mercantile Exchange. Prices are headed lower for the first time in three weeks.