Natural gas futures dropped for a second day in New York on speculation that government data will show a bigger-than-normal inventory gain for last week. Gas declined as much as 1.2 percent. An Energy Department report due at 10:30 a.m. in Washington may show stockpiles expanded by 67 billion cubic feet in the seven days ended Oct. 19 to 3.843 trillion, according to the median of 26 analyst estimates compiled by Bloomberg. The five-year average gain for the week is 65 billion. “The prospect of a slightly larger-than-normal injection is definitely something to be concerned about,� said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “We’re still heading toward record inventories.� Natural gas for November delivery fell 2 cents, or 0.6 percent, to $3.43 per million British thermal units at 9:37 a.m. on the New York Mercantile Exchange. The futures are down 6.2 percent from a year ago. Gas advanced to $3.648 per million Btu on Oct. 22, the highest intraday price since Dec. 2. Inventories may climb to a record 3.903 trillion cubic feet by Oct. 31, the Energy Department said Oct. 10 in its monthly Short-Term Energy Outlook. U.S. natural gas production in 2012 will average an all- time high of 68.85 billion cubic feet a day, up 4 percent from last year, the department said. The number of rigs drilling for natural gas in the U.S. rose by five to 427 last week, according to data released Oct. 19 by Baker Hughes Inc. in Houston. The rig count is down 47 percent this year. Mild Weather Commodity Weather Group LLC in Bethesda, Maryland, predicted mostly warmer-than-normal weather on the East Coast through Oct. 29. The low in New York on Oct. 27 may be 56 degrees Fahrenheit (13 Celsius), 9 above normal, according to AccuWeather Inc. in State College, Pennsylvania. The low in Boston may be 52 degrees, also 9 more than the usual reading. Heating demand in the Northeast may be 60 percent below normal on Oct. 27, data from Weather Derivatives in Belton, Missouri, show. About 50 percent of U.S. households use gas for heating, according to the Energy Department. A lack of Pacific Ocean warming and of blocking patterns in the Atlantic will probably mean warmer-than-normal weather in the eastern U.S. for the next three months, said Todd Crawford, chief meteorologist at Weather Services International. LNG Terminal Temperatures in the East may be about 2 degrees Fahrenheit (1 Celsius) above normal from November through January, while the Northwest cools, according to a seasonal forecast Oct. 22 from the Andover, Massachusetts-based company. Cheniere Energy Inc. (LNG), the first company to win approval to export gas from the continental U.S., is considering a 50 percent expansion of capacity at its Sabine Pass terminal in Louisiana as LNG demand rises. “When we marketed the project at Sabine Pass, clearly we had more demand than we could satisfy,� Nicolas Zanen, the vice president of trading at Cheniere, said in an interview in Singapore today. “It makes sense to look at expanding to a fifth and a sixth� train for liquefying gas, he said. No timeline for enlarging the facility has been set, he said. The boom in oil and natural gas production helped the U.S. cut its reliance on imported fuel. America met 83 percent of its energy needs in the first six months of the year, department data show. If the trend goes on through 2012, it will be the highest level of self-sufficiency since 1991. 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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