Natural Gas Futures Slide for Second Day on Stockpile Outlook

Aug 26, 2014 2:54 pm ET

Aug. 26 (Bloomberg) -- Natural gas futures declined in New York for the second time in three days on speculation that stockpiles will expand at a faster-than-normal pace, narrowing a supply deficit.

Gas inventories probably climbed by 78 billion cubic feet in the week ended Aug. 22, compared with the five-year average gain of 58 billion, according to the median of nine analyst estimates compiled by Bloomberg. The stockpile deficit to the five-year norm narrowed to 17 percent from a record 55 percent at the end of March.

“We’re going to crush the five-year average injection again, and that will not be good for the bulls,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “We’ve made good progress in narrowing the storage deficit.”

Natural gas for September delivery fell 2.6 cents, or 0.7 percent, to settle at $3.911 per million British thermal units on the New York Mercantile Exchange after touching a two-week high of $3.978. Volume for all futures traded was 6 percent below the 100-day average at 2:43 p.m. Futures are down 7.5 percent this year.

Gas inventories climbed by more than the five-year average for 18 consecutive weeks as of Aug. 15, while production may advance 5.3 percent this year to a record 73.89 billion cubic feet a day, data from the Energy Information Administration show. The EIA’s weekly inventory report is scheduled for release Aug. 28.

Marcellus Production

Gas output from the Marcellus shale formation in the Northeast will climb 1.6 percent to 15.88 billion cubic feet a day in September from a month earlier, the EIA said Aug. 11 in its monthly Drilling Productivity Report.

Commodity Weather Group LLC in Bethesda, Maryland, predicted mostly normal temperatures in the lower 48 states from Sept. 5 through Sept. 9.

The high in Boston on Sept. 9 may be 77 degrees Fahrenheit (25 Celsius), 2 more than usual, said AccuWeather Inc. in State College, Pennsylvania. Houston may reach 90 degrees, matching the average reading for the day.

Power plants account for 31 percent of gas demand, according to the EIA, the Energy Department’s statistical arm.

--With assistance from Mario Parker in Chicago.