Natural gas futures climbed in New York after a government report that showed U.S. stockpiles increased less than expected last week prompted speculation that output growth may slow. Gas inventories rose 70 billion cubic feet in the week ended May 6 to 1.827 trillion cubic feet, the Energy Department said today. Analyst estimates compiled by Bloomberg showed a gain of 71 billion. A separate survey of Bloomberg users showed an increase of 72 billion. “The storage number was definitely on the more bullish side of the trade,” said Jason Schenker, the president of Prestige Economics, an energy advisory company in Austin, Texas. “It was somewhat consistent with weather data, but we’d still question where the glut of unconventional gas production is that should have made this number bigger.” Natural gas for June delivery rose 3.4 cents, or 0.8 percent, to $4.215 per million British thermal units at 11:51 a.m. on the New York Mercantile Exchange. The futures have declined 3.4 percent this year. Stockpiles were 2 percent below the five-year average and 12 percent below last year’s level, the widest year-on-year deficit since the week ended Aug. 1, 2008. The Energy Department lowered its forecast for natural gas output in 2011 by 0.1 percent and raised its outlook for prices in its Short-Term Energy Outlook on May 10. Gas Production Marketed gas production will average 63.23 billion cubic feet a day in 2011, down from 63.32 billion estimated in April, the department said, citing a drop in drilling and a forecast of higher consumption. The estimate is up 2.3 percent from 61.83 billion produced in 2010. Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $4.37 per thousand cubic feet, or $4.24 per million Btu, up from the previous estimate of $4.10 per million Btu, according to the department. Hotter-than-normal weather is likely in the Northeast and parts of the Midwest and South from May 22 through May 26, according to MDA EarthSat Weather in Rockville, Maryland. Above- normal temperatures may increase air conditioner use, boosting the demand for gas as a power-plant fuel. The high temperature in New York on May 23 may be 83 degrees Fahrenheit (28 Celsius), 10 above normal, according to AccuWeather Inc. in State College, Pennsylvania. The high in Houston may be 89 degrees, 2 above normal. Power plants use 30 percent of the nation’s gas supplies, according to the Energy Department. To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net; To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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