Sept. 5 (Bloomberg) -- Natural gas futures fell from a five-week high in New York after a government report showed that U.S. stockpiles increased by more than forecast last week.
Gas dropped as much as 2.9 percent after the Energy Information Administration said inventories expanded by 58 billion cubic feet in the week ended Aug. 30 to 3.188 trillion. Analyst estimates compiled by Bloomberg showed a gain of 54 billion. A survey of Bloomberg users also predicted an increase of 54 billion.
“It’s definitely a bearish number,” said Aaron Calder, an analyst at Gelber & Associates in Houston. ‘It definitely showed that some power generators are switching back to cheaper coal for power generation.’’
Natural gas for October delivery slid 10.8 cents to settle at $3.575 per million British thermal units on the New York Mercantile Exchange. Volume was 24 percent above the 100-day average at 2:54 p.m. The futures advanced to $3.719 in intraday trading, the highest level since July 25. Prices are up 6.7 percent this year.
The discount of October to November futures widened 0.7 cent to 9.1 cents. October gas traded 33.7 cents below the January contract, compared with 31.1 cents yesterday.
October $3.50 puts were the most active options in electronic trading. They were 2.5 cents higher at 6.6 cents per million Btu on volume of 1,825 at 2:55 p.m. Puts accounted for 61 percent of trading volume. Implied volatility for October at- the-money options was 29.34 percent at 3 p.m., compared with 31.6 percent yesterday.
The stockpile increase was smaller than the five-year average gain for the week of 60 billion cubic feet, department data show. The surplus to the five-year average dipped to 1.4 percent from 1.5 percent the previous week. Supplies were 6.2 percent below year-earlier inventories, compared with 7 percent in the prior period.
The storage injection reported today “was more than expected and implies some weakening of the background supply- demand balance, which may carry through for the weeks ahead,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said in a note to clients today.
Commodity Weather Group LLC in Bethesda, Maryland, predicted normal or lower-than-average temperatures in the eastern U.S. through Sept. 9.
The high in New York on Sept. 7 may be 78 degrees Fahrenheit (26 Celsius), matching the usual reading, according to AccuWeather Inc. in State College, Pennsylvania. Temperatures in Washington may reach 81, 2 below normal.
Power generation accounts for 32 percent of U.S. gas demand, according to the Energy Information Administration, the Energy Department’s statistical arm.
Natural gas production from the lower-48 states increased 0.1 percent in June to 73.62 billion cubic feet a day from a revised 73.51 billion in May, the EIA said Aug. 30.
The U.S. met 87 percent of its own energy needs in the first five months of 2013, on pace to be the highest annual rate since 1986, according to EIA data.
Tropical Depression Gabrielle was weakening as it approached the Dominican Republic, the National Hurricane Center in Miami said in a 2 p.m. outlook. The system is expected to dissipate today or tomorrow.
An area of disorganized showers and thunderstorms that extends from the northeast Leeward Islands has a 30 percent chance of becoming a tropical cyclone within the next five days, the hurricane center said. Another system in the southwestern Gulf of Mexico has a 50 percent chance of development before going ashore in Mexico tomorrow.
The Gulf will account for 5.7 percent of U.S. gas production this year, EIA data show. Sept. 10 is the statistical peak of the Atlantic hurricane season, according to the hurricane center.
--With assistance from Mario Parker in Chicago. Editors: Charlotte Porter, Richard Stubbe