TRD: U.S. GAS : Futures Little Changed Ahead of Gas Storage Data
--Rise of 36 bcf in gas inventory expected in 10:30 a.m. EDT data
--Build would be smaller than usual, due to hurricane impacts
--Estimate would put storage at 3.4 tcf, a record for this time of year
By David Bird
NEW YORK--Natural-gas futures were modestly lower early Thursday, awaiting U.S. weekly inventory data that is expected to show a smaller-than-normal increase, due to Hurricane Isaac's impact on offshore Gulf production.
Energy Information Administration data, due 10:30 a.m. EDT, is expected to show gas inventory rose by 36 billion cubic feet last week, keeping the stockpile at a record high for this time of year and maintaining pressure on prices.
A expected rise would be lower than the 62-bcf rise last year and the five-year average increase of 60 bcf. Still, it would lift inventories to 3.409 trillion cubic feet, a record high for this time of year, with several weeks to go before winter drawdowns begin. Storage didn't top 3.4 tcf until Oct. 5 last year.
October-delivery natural gas futures on the New York Mercantile Exchange were trading 0.7 cent lower, at $2.788 per million British thermal units, on the heels of a 2.1% fall Wednesday.
Precautionary shutdowns as Isaac made its way to the Gulf gas-producing region temporarily closed virtually all gas flow.
Currently, the U.S. gets 4.3 bcf a day of gas from the Gulf, or 5.2% of the nation's output. In 2005, daily output from the Gulf was 10.1 bcf, or 15.4% of total U.S. output. About 26% of the Gulf output had yet to restart as of Wednesday, government data show.
Analysts at the Schork Group said in a research note that along with cutting supply, Isaac's soaking rains cooled temperatures and knocked out power in many areas. "With regard to the impact from storm-related shut-ins, this morning's report is a coin flip," the analysts said.
Last week's EIA data showed weekly gas injections topped the year-earlier level for the first time since mid-April, as high output from shale gas fields continues to plump storage levels, while demand is dropping with the end of peak-demand summer season.
Analysts said gas futures could swing broadly Thursday, as they often do in repositioning after the inventory report. Several, like Jim Ritterbusch, president of Ritterbusch & Associates, see prices soon headed to back to the mid-June level of $2.50/mmBtu as bloated inventories continue to weigh on the market amid waning seasonal demand.
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $2.84/mmBtu, according to IntercontinentalExchange, compared with Wednesday's average of $2.88/mmBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $3.04/mmBtu, compared with $3.25/mmBtu.
