BLBG: Natural Gas Falls on Speculation Supplies to Stay Above Average
Natural gas fell in New York on speculation slowing demand from factories and power plants will keep stockpiles above average levels.
Inventories last week probably dropped 98 billion cubic feet, the median of 10 analyst estimates compiled by Bloomberg. The average decline for the week is 121 billion, according to the Energy Department, whose next report is due tomorrow. Supplies in last week’s report were 12 percent above the five-year average.
“People are going to be a little cautious in front of the storage number,” said Tom Orr, research director at Weeden & Co. in Greenwich, Connecticut. “No one is very excited about a turn in prospects for gas. The outlook for the economy is very bleak and that 2009 will be a struggle.”
Natural gas for April delivery fell 13.2 cents, or 3.1 percent, to $4.15 per million British thermal units at 10:03 a.m. on the New York Mercantile Exchange. Gas futures have declined 26 percent this year. The price is down 70 percent from a 2008 high of $13.694 per million Btu.
The recession began reducing demand for gas last year, as manufacturers accelerated factory shutdowns. Industrial users account for 29 percent of gas consumption.
Companies shed 697,000 jobs in the U.S. in February as the recession’s grip tightened, ADP Employer Services said today. The drop in the report, a survey based on payroll data, was larger than economists forecast and followed a revised cut of 614,000 for the prior month.
“What remains of concern for most is the level of non- weather-related demand loss,” Martin King, an analyst at FirstEnergy Capital Corp. in Calgary, said in a report today.
General Motors Corp., the biggest U.S. automaker, closed most of its 22 plants in North America last month. Dow Chemical Co. and Caterpillar Inc., the world’s largest producer of construction equipment, have also idled production.
Gas storage levels may finish the peak-demand heating season at the end of March at 1.6 trillion cubic feet, King said. Inventories have averaged about 1.36 trillion on that date over the past five years.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
