Natural gas futures tumbled in New York Thursday, heading for the biggest weekly decline in a month, after a government report showed an unexpected gain in U.S. stockpiles as mild weather reduced demand.
Gas dropped as the Energy Department reported inventories rose by 4 billion cubic feet in the week ended Nov. 23 to 3.877 trillion cubic feet, the latest seasonal gain since 2009. Analyst estimates compiled by Bloomberg showed an expected withdrawal of 9 billion cubic feet.
“That’s a pretty bearish inventory number,” said Gordy Elliott, a risk-management specialist at FC Stone LLC in St. Louis Park, Minnesota. “December forecasts have turned warmer and there are no supply issues at all. This storage report could be the thing that breaks the market.”
Natural gas for January delivery fell 12.9 cents, or 3.4 percent, to $3.672 per million British thermal units at 11 a.m. on the New York Mercantile Exchange. Gas traded at $3.698 before the storage number was released at 10:30 a.m. in Washington. Gas futures have dropped 5.9 percent this week, heading for the biggest decline since the week ended Oct. 26.
The five-year average stockpile change for the week is a decline of 18 billion cubic feet, department data show. A surplus to the five-year average rose to 5.2 percent from 4.5 percent the previous week. A surplus to the five-year average widened for the first since Oct. 26.
Supplies were 0.7 percent above year-earlier inventories, compared with 0.6 percent last week. Stockpiles rose by 2 billion cubic feet in the week ended Nov. 27, 2009.
MDA Weather Services in Gaithersburg, Maryland, predicted above-normal temperatures across most of the lower 48 states through Dec. 8.
The low in New York on Dec. 4 may be 47 degrees Fahrenheit (8 Celsius), 11 above normal, according to AccuWeather Inc. in State College, Pennsylvania. The low in Chicago may be 30 degrees, 4 more than the usual reading.
Heating demand in the U.S. may be 25 percent below normal from Dec. 5 through Dec. 9, according to Weather Derivatives in Belton, Missouri. Demand was 18 percent below the usual level in the week ended Nov. 24, the company said. About 50 percent of U.S. households use gas for heating, Energy Department data show.
The number of rigs drilling for gas in the U.S. rose by 11 to 428 in the week ended Nov. 23, according to data from Baker Hughes Inc. in Houston. The rig count is down 47 percent this year.
Marketed gas production will average a record 68.84 billion cubic feet a day this year, up 4 percent from 2011, the Energy Department said Nov. 6 in its monthly Short-Term Energy Outlook.
The boom in oil and natural gas production helped the U.S. cut its reliance on imported fuel. America met 83 percent of its energy needs in the first eight months of the year, department data show. If the trend goes on through 2012, it will be the highest level of self-sufficiency since 1991.
© Copyright 2016 Bloomberg News. All rights reserved.