BLBG: Natural Gas Falls in New York as Report Shows Ample Supplies
Natural gas futures in New York fell for a third day after a government report showed that U.S. supplies of the heating and factory fuel are ample to meet demand in the weeks ahead.
Stockpiles stood at 2.83 trillion cubic feet the week ended Jan. 2 after dropping 47 billion cubic feet, the U.S. Energy Department said. The surplus to the five-year average widened to 3.2 percent from 2 percent in last week’s report, as the U.S. recession and mild weather curbed demand.
“You can write off the first quarter because no one is expecting a rebound in industrial demand and it may get worse,” said Cameron Horwitz, an analyst at Sun Trust Robinson Humphrey in Houston. “As you build versus that five-year average, that’s definitely a bearish sign for the market. We’re going the wrong way right now.”
Natural gas for February delivery fell 20.9 cents, or 3.6 percent, to $5.663 per million British thermal units at 11:38 a.m. on the New York Mercantile Exchange. Gas was trading at $5.775 before the report was released at 10:30 a.m.
“The holiday period also cut a bit more industrial demand than expected,” said Horwitz, who had forecast a withdrawal of 65 billion cubic feet. A survey of analysts anticipated a decline of 78 billion cubic feet, based on the median of 18 estimates compiled by Bloomberg.
The labor market worsened in the U.S. last month, with the number of Americans collecting unemployment benefits reaching a 26-year high, a Labor Department report today showed.
Industrial demand for gas may contract by 7 percent in 2009, Ronald Barone, an analyst with UBS AG in New York, said in a report yesterday. DuPont Co. and Dow Chemical Co. are among U.S. chemical makers that have announced capacity reductions, Barone said. The chemical industry accounts for 36 percent of industrial demand for gas, he said.
Heating needs last week were 15 percent below normal in the Midwest and 4.7 percent less than typical in the Northeast, David Salmon of Belton, Missouri-based Weather Derivatives, said in a note on Jan. 5. Almost three-quarters of Midwest households rely on gas for heating.
