May 12 (Bloomberg) -- Natural gas futures slipped to a five-week low in New York on forecasts for mild weather that would curtail demand for the power-plant fuel, allowing supplies to rebuild at a faster pace.
Gas dropped 2.1 percent. Commodity Weather Group LLC predicted mostly normal temperatures in the Midwest from May 17 through May 21. A government report last week showed gas inventories rose 74 billion cubic feet in the seven days ended May 2, compared with the five-year average gain of 72 billion for the period.
“We’re finally getting some spring-like weather across much of the country,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “The forecasts combined with the bearish storage reports we’ve seen are pushing prices lower.”
Natural gas for June delivery fell 9.7 cents to $4.434 per million British thermal units on the New York Mercantile Exchange, the lowest settlement since April 2. The futures are up 4.8 percent this year.
Money managers’ net-long wagers on U.S. natural gas declined 2.3 percent to 386,338 in the week ended May 6, dropping to a five-month low, the Commodity Futures Trading Commission said in a May 9 report. The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Futures U.S. Henry Hub contract.
The high in Minneapolis on May 19 may be 70 degrees Fahrenheit (21 Celsius), matching the normal temperature, according to AccuWeather Inc. in State College, Pennsylvania. Power plants account for 31 percent of gas consumption, according to the Energy Information Administration, the Energy Department’s statistical arm.
Gas stockpiles totaled 1.055 trillion as of May 2, the lowest for that period since 2003, EIA data show. Inventories were 48 percent below the five-year average and 43 percent less than the year-earlier total.
Gross gas output in the lower 48 states rose 0.1 percent in February to 75.37 billion cubic feet a day from a revised 75.32 billion the previous month, the U.S. said April 30 in its monthly EIA-914 production report. The “other states” category, which includes the Marcellus shale in the Northeast, gained 2.1% on new wells and improved weather.
Gas production from the Marcellus will climb 1.8 percent in June to 14.6 billion cubic feet a day from 14.3 billion a month earlier, the EIA said today in its monthly Drilling Productivity Report.
Williams Cos. said it will begin full construction in June on a project to increase natural gas supplies to the New York City boroughs of Brooklyn and Queens. The project, which includes 3.2 miles of pipeline and related equipment, will begin service in the fourth quarter, Williams said in a statement today.