Natural gas futures fell for the first time in five days after a government report showed U.S. inventories rose more than forecast last week as mild weather reduced demand for the power-plant fuel.
Stockpiles jumped 103 billion cubic feet in the week ended Sept. 10 to 3.267 trillion, the Energy Department said today. Analysts estimates compiled by Bloomberg showed an expected increase of 93 billion. A separate survey of Bloomberg users showed an increase of 95 billion. The weekly inventory gain exceeded the five-year average for the first time since April.
“We are now going to whittle down the year-over-year storage deficit and we believe the next three successive storage injections are going to be very big unless we have a Gulf shut in,” said Teri Viswanath, a director of commodities research at Credit Suisse Securities USA in Houston.
Natural gas for October delivery fell 9.3 cents, or 2.3 percent, to $3.902 per million British thermal units at 10:58 a.m. on the New York Mercantile Exchange. Gas traded at $4.023 before the report was released at 10:30 a.m. The futures have declined 30 percent this year.
Last week’s storage increase was bigger than the five-year average gain of 77 billion cubic feet, department data show. A surplus to the five-year average rose for the first time since the week ended April 30, increasing to 6.2 percent from 5.5 percent the previous week. A deficit to year-earlier supplies narrowed to 5.3 percent from 6.5 percent.
Inventories will peak at 3.687 trillion cubic feet before cold-weather demand prompts utilities to pull gas from storage, the department predicted in its monthly Short-Term Energy Outlook on Sept. 8. Stockpiles rose to a record 3.837 trillion cubic feet last November.
Temperatures in the eastern U.S. were mostly in a normal range last week, according to AccuWeather Inc. in State College, Pennsylvania. New York will have a high of 75 degrees Fahrenheit (24 Celsius) tomorrow, 1 degree above normal.
About 23 percent of U.S. electricity is generated using natural gas, according to the Energy Department.
Gas rose earlier in the day as strengthening Atlantic storms raised concern that gas production in the Gulf of Mexico may be disrupted.
Tropical Storm Karl is forecast to become a hurricane today in the southern Gulf, according to the National Hurricane Center. In the Atlantic, Hurricane Igor is moving toward Bermuda and Hurricane Julia was 875 miles west-northwest of the Cape Verde Islands.
About 10 percent of U.S. gas output will come from federal waters in the Gulf of Mexico this year compared with 17 percent five years ago, according to Energy Department estimates.
© Copyright 2023 Bloomberg News. All rights reserved.