WSJ: Natural-Gas Futures Up Modest After Steep Drop on Data
--Concerns grow as storage level rises to 15% above five-year average
--Brief break seen in below-normal temperatures in Northeast, Midwest
--Modest rallies likely capped by inventory level
By David Bird
NEW YORK--Natural-gas futures were modestly higher Friday after a steep 3.9% drop a day earlier on higher-than-expected U.S. inventory levels.
The U.S. Energy Information Administration said domestic gas stockpiles fell by 118 billion cubic feet last well below the average 132-bcf drop predicted in a Dow Jones Newswires survey.
The withdrawal was the second in a row to come in sharply below market expectations, forcing investors to revise forecasts for the amount of gas likely to remain in storage at the end of the high-demand winter season.
Stocks of 2.684 trillion cubic feet now stand at 15% above the five-year average level for this time of year, when the winter winding down.
Forecasters call for temperatures in the key Northeast and Midwest consumer markets to return warm up to normal levels in the coming six to 10 days, before turning to below-normal levels in the 11 to 15 day outlooks.
Analysts said that's a recipe for continued price volatility as investors react to short-term swings in the weather and, implicitly, on gas demand.
March-delivery gas futures on the New York Mercantile Exchange was 2.6 cents higher at $3.311 per million British thermal units after a 13.3-cent fall from two-week highs on Thursday.
Jim Ritterbusch, president of Ritterbusch & Associates, said he expects rallies to be modest and capped below $3.4/mmBtu as the market focuses on high supply more than demand. The "EIA report will keep end of season supply expectations skewed in a bearish direction," he said..
