Natural gas futures slipped in New York as forecasts showed warmer-than-normal weather in the last week of April, reducing demand for the heating fuel.
Gas dropped 0.2 percent as forecasters including Commodity Weather Group LLC in Bethesda,Maryland, said in the 11- to 15- day outlook that the eastern U.S. will probably be warmer than normal. Futures rose earlier after government data showed industrial production increased more than forecast in March.
“The weather is not supporting the market,” said Carl Neill, an energy consultant at Risk Management Inc. in Atlanta. “In the short term, before the hurricane season starts, it probably will be a pretty bearish market.”
Natural gas for May delivery dipped 0.8 cent to settle at $4.204 per million British thermal units on the New York Mercantile Exchange. The futures gained 4 percent this week and have dropped 4.6 percent this year.
There will be a “warmer eastern half” from April 25 to April 29, according to MDA EarthSat Weather in Gaithersburg, Maryland.
The high in New York on April 26 will be 75 degrees Fahrenheit (23 Celsius), 11 degrees above normal, according to AccuWeather Inc. in State College, Pennsylvania.
About 52 percent of U.S. households use natural gas for heating, according to the Energy Department.
Gas rose 1.7 percent yesterday after the Energy Department reported inventories increased 28 billion cubic feet in the week ended April 8 to 1.607 trillion cubic feet.
Supply Report
The stockpile increase matched the five-year average gain for the week, leaving the storage surplus unchanged from the previous week at 0.6 percent. A deficit to year-earlier supplies widened to 7.9 percent from 5.2 percent.
Yesterday’s gain “was more technical than fundamental,” Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said in a report today. “We maintain our bearish bias for natural gas.”
Industrial output rose 0.8 percent last month, the fifth straight gain, after a revised 0.1 percent gain in February, the Federal Reserve said today in Washington. Economists surveyed by Bloomberg News projected a 0.6 percent increase, according to the median estimate.
Gas consumption will rise 1 percent this year to 66.75 billion cubic feet a day “primarily because of the increase in consumption in the industrial sector,”, the Energy Department estimated on April 12 in a monthly outlook.
Industrial demand will average 18.73 billion cubic feet a day, up 3.6 percent from 2010.
Gas Rigs
The number of gas drilling rigs in the U.S. fell 4 to 885 this week, according to Houston-based Baker Hughes Inc. The total was 9 percent lower than a year earlier.
Chesapeake Energy Corp. (CHK), the most active U.S. oil and natural-gas driller, agreed to buy Bronco Drilling Co. for about $316.8 million in cash, adding 22 onshore rigs and increasing capacity to produce oil and gas.
Gas futures volume in electronic trading on the Nymex was 219,047 as of 2:42 p.m., compared with the three-month average of 325,000. Volume was 431,564 yesterday. Open interest was 973,956 contracts. The three-month average open interest is 910,000.
The exchange has a one-business-day delay in reporting open interest and full volume data.
Posts
0 comments