April 08, 2010, 3:12 PM EDT
By Moming Zhou and Reg Curren
April 8 -- Natural gas futures declined in New York after a government report showed that U.S. inventories increased more than analysts anticipated.
Stockpiles gained 31 billion cubic feet in the week ended April 2 to 1.669 trillion cubic feet, the Energy Department said today. Analysts forecast a rise of 28 billion. An unexpected rise in the number of Americans filing initial jobless claims also weighed on futures.
“You are increasing supply at a time when you don’t need it,” said Cameron Horwitz, an analyst at SunTrust Robinson Humphrey in Houston. The stockpile gain “suggests that industrial demand might be a little bit weaker than people had assumed.”
Natural gas for May delivery fell 11 cents, or 2.7 percent, to settle at $3.909 per million British thermal units on the New York Mercantile Exchange. The futures have fallen 30 percent this year.
Inventories last week were 12 percent above the five-year average, wider than an 11 percent surplus a week earlier, today’s report showed.
Gas futures fell to $3.81 per million Btu on April 1, the lowest level since Sept. 28, and touched a three-week high of $4.334 on April 6.
Prices may move in “a trading range between $3.75 and $4.30 between now and June,” said Michael Rose, director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. “Without economic data to support it, natural gas isn’t going anywhere right now.”
Initial jobless applications increased by 18,000 to 460,000 in the week ended April 3, Labor Department figures showed today. Economists had forecast a decline.
Economic Challenges
Federal Reserve Chairman Ben S. Bernanke said in a speech in Dallas yesterday that joblessness, home foreclosures and weak lending to small businesses pose challenges to the economy.
“The very warm weather and the lack of any strong signs of industrial demand coming back have put pressure on prices,” Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut, said in a telephone interview.
The worst recession since the 1930s cut industrial purchases of gas by 7.7 percent in 2009, according to the Energy Department. A slower economic recovery would limit consumption of gas by factories, chemical plants and steel mills.
Factory Fuel
Industrial demand will probably increase 6 percent this year, said Horwitz. “But that’s really just a function of rebound from last year’s anemic level. The increase in gas rigs is likely going to lead to on-shore supply growth at a time when the demand level still remains rather low.”
The number of gas rigs working in the U.S. increased to 949 last week, up 43 percent from July, according to Baker Hughes Inc.
“We may get some support at the $3.81 level,” Horowitz said. “But if you continue to put rigs to work, potentially you could break below that level.”
Concern over the strength of the U.S. recovery and the possibility that a financial rescue package for Greece will collapse also pressed commodity and stock markets lower, said Dan Flynn, an energy trader at PFGBest in Chicago.
“Given the bad news we’ve been getting, people are lightening up on risk,” Flynn said in a telephone interview.
Natural gas at the benchmark Henry Hub in Erath, Louisiana, fell 16.38 cents, or 4 percent, to $3.9206 per million Btu at 1:28 p.m., according to data compiled by Bloomberg.
Gas futures volume in electronic trading on the Nymex was 279,822 contracts as of 2:47 p.m., compared with a three-month daily average total of 227,000. Volume was 236,607 yesterday. Open interest was 853,795 contracts, compared with the three- month average of 793,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
Source: http://www.businessweek.com/news/2010-04-08/natural-gas-declines-in-new-york-before-u-s-stockpile-report.html
By Moming Zhou and Reg Curren
April 8 -- Natural gas futures declined in New York after a government report showed that U.S. inventories increased more than analysts anticipated.
Stockpiles gained 31 billion cubic feet in the week ended April 2 to 1.669 trillion cubic feet, the Energy Department said today. Analysts forecast a rise of 28 billion. An unexpected rise in the number of Americans filing initial jobless claims also weighed on futures.
“You are increasing supply at a time when you don’t need it,” said Cameron Horwitz, an analyst at SunTrust Robinson Humphrey in Houston. The stockpile gain “suggests that industrial demand might be a little bit weaker than people had assumed.”
Natural gas for May delivery fell 11 cents, or 2.7 percent, to settle at $3.909 per million British thermal units on the New York Mercantile Exchange. The futures have fallen 30 percent this year.
Inventories last week were 12 percent above the five-year average, wider than an 11 percent surplus a week earlier, today’s report showed.
Gas futures fell to $3.81 per million Btu on April 1, the lowest level since Sept. 28, and touched a three-week high of $4.334 on April 6.
Prices may move in “a trading range between $3.75 and $4.30 between now and June,” said Michael Rose, director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. “Without economic data to support it, natural gas isn’t going anywhere right now.”
Initial jobless applications increased by 18,000 to 460,000 in the week ended April 3, Labor Department figures showed today. Economists had forecast a decline.
Economic Challenges
Federal Reserve Chairman Ben S. Bernanke said in a speech in Dallas yesterday that joblessness, home foreclosures and weak lending to small businesses pose challenges to the economy.
“The very warm weather and the lack of any strong signs of industrial demand coming back have put pressure on prices,” Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut, said in a telephone interview.
The worst recession since the 1930s cut industrial purchases of gas by 7.7 percent in 2009, according to the Energy Department. A slower economic recovery would limit consumption of gas by factories, chemical plants and steel mills.
Factory Fuel
Industrial demand will probably increase 6 percent this year, said Horwitz. “But that’s really just a function of rebound from last year’s anemic level. The increase in gas rigs is likely going to lead to on-shore supply growth at a time when the demand level still remains rather low.”
The number of gas rigs working in the U.S. increased to 949 last week, up 43 percent from July, according to Baker Hughes Inc.
“We may get some support at the $3.81 level,” Horowitz said. “But if you continue to put rigs to work, potentially you could break below that level.”
Concern over the strength of the U.S. recovery and the possibility that a financial rescue package for Greece will collapse also pressed commodity and stock markets lower, said Dan Flynn, an energy trader at PFGBest in Chicago.
“Given the bad news we’ve been getting, people are lightening up on risk,” Flynn said in a telephone interview.
Natural gas at the benchmark Henry Hub in Erath, Louisiana, fell 16.38 cents, or 4 percent, to $3.9206 per million Btu at 1:28 p.m., according to data compiled by Bloomberg.
Gas futures volume in electronic trading on the Nymex was 279,822 contracts as of 2:47 p.m., compared with a three-month daily average total of 227,000. Volume was 236,607 yesterday. Open interest was 853,795 contracts, compared with the three- month average of 793,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
Source: http://www.businessweek.com/news/2010-04-08/natural-gas-declines-in-new-york-before-u-s-stockpile-report.html
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