U.S. natural gas futures rose, extending the biggest weekly gain since May, as Morgan Stanley predicted that storage levels at the end of October will be in line with the last three years. Gas for delivery in September climbed 2.2 percent to $3.44 per million British thermal units in electronic trading on the New York Mercantile Exchange at 8:58 a.m. London time. It gained 4.3 percent last week, the most since the five days to May 24. Natural gas in storage will be approximately 3.86 trillion cubic feet by the end of October, Morgan Stanley analysts Adam Longson and Tai Liu in New York wrote in an e-mailed report. The average futures price will be $3.42 per million Btu in the third quarter and $3.69 in the fourth, according to the analysts. Gas has tumbled 22 percent from its 2013 high in April as mild weather trimmed air-conditioning demand from power plants. Futures gave up an advance for the year as stockpiles swelled to a surplus and the peak cooling season neared an end. The contract is still 70 percent above the 100-day moving average. Today’s price compares with $2.72 per million Btu a year ago and $3.44 on the same day in 2011, according to data compiled by Bloomberg. The contract fell to a 10-year low of $1.902 per million Btu April 19, 2012 as storage levels approached full. Hedge funds cut bullish bets on U.S. natural gas to the lowest level in five months, capping a 52 percent drop since April’s record high, as prospects faded for a weather-driven rally. Money managers reduced net-long positions, or wagers on rising prices, by 9.9 percent in the seven days ended Aug. 13, according to the Commodity Futures Trading Commission’s Aug. 16 Commitments of Traders report. It was the lowest level since March 5 and the largest drop in nine weeks. To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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