Azernews.Az

BY Bloomberg

Natural gas futures slid in New York to the lowest level since September 2012 after a government report that U.S. inventories fell by less than forecast last week.

The Energy Information Administration said stockpiles dropped 49 billion cubic feet in the week ended Dec. 19 to 3.246 trillion. Analysts estimated a decline of 63 billion while a survey of Bloomberg users predicted a withdrawal of 59 billion.

“It’s so small because it was warm,” said Aaron Calder, senior market analyst at Gelber & Associates in Houston. “We expected some power generators to switch more to natural gas because of lower prices, but we didn’t see that. Meanwhile, the market continues to be flooded by production.”

Natural gas for January delivery fell 15.8 cents, or 5 percent, to $3.013 per million British thermal units at 12:14 p.m. on the New York Mercantile Exchange after sliding to $3.003, the lowest intraday price since Sept. 26, 2012. Gas traded at $3.071 before the storage number was released at noon in Washington. Volume was 21 percent below the 100-day average. Prices are down 29 percent this year, heading for the first annual drop since 2011.

The market will be shut tomorrow in observance of Christmas. The EIA released its gas supply report a day early because of the holiday.

Smaller Decline

The stockpile decrease was smaller than the withdrawal of 193 billion a year earlier and the five-year average of 138 billion, according to the EIA. A deficit to the five-year norm narrowed to 4.9 percent from 7.3 percent the previous week. Supplies were 4.8 percent above year-earlier inventories, up from a surplus of 0.2 percent in last week’s report.

“The storage number is just a pure weather play right now,” said Santiago Diaz, energy trading associate at FCStone Latin America LLC in Miami. “We didn’t have a cold week and we don’t have a cold Christmas, and that is adding to the downward pressure.”

The Midwest through the East Coast will see much-above- normal temperatures through Dec. 28, said MDA Weather Services in Gaithersburg, Maryland. Weather models show stronger cold will push across the central states during the first week of January than previously forecast, said MDA.

The high temperature in New York City tomorrow may be 57 degrees Fahrenheit (14 Celsius), 17 above normal, and Chicago’s reading may be 5 higher than usual at 38, according to data from AccuWeather Inc. in State College, Pennsylvania. About 49 percent of U.S. households use gas for heating, led by the Midwest and Northeast.

This December is on track to be 15 percent warmer than a year earlier, with the number of heating degree days, a proxy for weather-driven energy demand, dropping to 777 from 909.5, Matt Rogers, president of Commodity Weather Group LLC in Bethesda, Maryland, said in an Dec. 22 e-mail. The previous December through February was the coldest for those months in 32 years, he said.

“I think more than likely we trade sideways until January, until the market gets a feel for are we going to get a winter or not,” Diaz said.