Natural Gas Futures Advance After Above-Normal Stockpile Decline

Feb. 28 (Bloomberg) -- Natural gas futures rose in New York, heading for the first monthly gain since October, after a government report showed that U.S. stockpiles fell more than average last week.

Gas advanced as much as 1.7 percent after the Energy Information Administration said inventories dropped 171 billion cubic feet in the week ended Feb. 22 to 2.229 trillion cubic feet. Analyst estimates compiled by Bloomberg showed a withdrawal of 170 billion. A survey of Bloomberg users predicted a decrease of 172 billion.

“The storage number was a little bit bullish,” said Kent Bayazitoglu, an analyst at Gelber & Associates in Houston. “March looks like it’s going to be quite cold and we definitely still have three more triple-digit withdrawals left in us.”

Natural gas for April delivery rose 4 cents, or 1.2 percent, to $3.474 per million British thermal units at 10:37 a.m. on the New York Mercantile Exchange. Gas traded at $3.458 before the storage number was released at 10:30 a.m. in Washington. Volume was 29 percent below the 100-day average. The futures have climbed 38 percent from a year ago.

The stockpile decrease was bigger than the five-year average decline for the week of 118 billion cubic feet, department data show. A surplus to the five-year average fell to 16 percent from 18 percent the previous week. Supplies were 12 percent below year-earlier inventories, compared with 9.2 percent last week.

Commodity Weather Group LLC in Bethesda, Maryland, said the weather may be colder than normal in the central U.S. from March 10 through March 14.

Chicago Cold

The low in Chicago on March 13 may be 19 degrees Fahrenheit (minus 7 Celsius), 11 less than usual, according to AccuWeather Inc. in State College, Pennsylvania. The low in Minneapolis may be 15 degrees, 8 below normal.

About 50 percent of U.S. households use gas for heating, according to the EIA, an arm of the Energy Department.

Marketed gas production will average a record 70.02 billion cubic feet a day this year, up 1.1 percent from 2012, as output from the Marcellus shale formation in the Northeast grows, the Energy Information Administration said in its monthly Short-Term Energy Outlook, released Feb. 12 in Washington.

Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $3.53 per million British thermal units in 2013, compared with $2.75 per million Btu last year, the agency said.

Stockpiles of the fuel may total about 2 trillion cubic feet at the end of March, down from 2.477 trillion at the same time last year, according to the report.

The boom in oil and natural gas production helped the U.S. cut its reliance on imported fuel. America met 84 percent of its energy needs in the first 11 months of last year, government data show. If the trend continued through 2012, it will be the highest level of self-sufficiency since 1991.

--Editors: Bill Banker, Charlotte Porter