Natural gas futures fell to the lowest level in almost a month after a government report showed a decline in U.S. stockpiles that was close to analysts’ forecasts.
Gas tumbled 4.1 percent after the Energy Department said stockpiles slipped 164 billion cubic feet in the week ended Dec. 10 to 3.561 trillion cubic feet. Analysts had estimated a drop of 165 billion. Gas also fell as forecasts showed cold weather will moderate in the U.S. Northeast later this month.
“The market is disappointed,” said Phil Flynn, an analyst with PFGBest in Chicago. “We are going to see a warmup later this month and we probably need a much larger withdrawal to get the bullish flame.”
Natural gas for January delivery fell 17.4 cents to settle at $4.048 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Nov. 18. Gas has declined 27 percent this year.
Last week’s stockpile decline was bigger than the five-year average of 153 billion cubic feet, department data showed. A surplus to the five-year average rose to 9.9 percent from 9.8 percent the previous week. A deficit to year-earlier supplies narrowed to 1 percent from 1.5 percent.
A survey of Bloomberg users predicted a drop of 163 billion for the week.
Northeast Temperatures
Temperatures will be above normal in the Northeast and in a normal range in New York, New Jersey and Pennsylvania from Dec. 23 to Dec. 29, according to the National Weather Service. Weather has been colder than normal since last week.
“The extreme below-normal cold weather is going away and at the same time we’ve still got tons of gas underground,” said Brad Florer, a trader at Kottke Associates Inc., an energy trading firm in Louisville, Kentucky. “The chart overall still looks pretty bearish.”
New York will have a high of 39 degrees Fahrenheit (4 degrees Celsius) on Dec. 29, 1 degree below normal, according to AccuWeather Inc. in State College, Pennsylvania. Boston will also have a high of 39 degrees, 1 degree above normal.
About 52 percent of U.S. households use natural gas for heating, according to the Energy Department.
‘Temperature-Focused’
“The market remains very temperature-focused,” James R. Crandell, an analyst with Barclays Capital in New York, said in a note to clients today. “Weather-driven demand has the potential to change the balance more than any other factor over the next few months.”
Gas stockpiles will total 1.833 trillion cubic feet at the end of the winter heating season in March, about 171 billion cubic feet higher than at the end of March 2010, the Energy Department said on Dec. 7 in its monthly Short-Term Energy Outlook report.
U.S. natural gas production may reach a record high of 62.09 billion cubic feet a day this year, the department estimated in the report.
The number of U.S. gas drilling rigs fell for the first week in three, down 13 to 948 in the week ended Dec. 10, according to data published by Baker Hughes Inc. The rig count was 25 percent higher than a year earlier.
This week’s rig report will be released tomorrow.
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, fell 2.18 cents, or 0.5 percent, to $4.1938 per million Btu on the Intercontinental Exchange.
Gas futures volume in electronic trading on the Nymex was 295,629 as of 2:43 p.m., compared with a three-month average of 286,000. Volume was 312,432 yesterday. Open interest was 786,367 contracts, compared with the three-month average of 790,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
To contact the reporter on this story: Moming Zhou in New York at Mzhou29@bloomberg.net;
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
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