US natural gas futures climb to two-week high after low storage gains

By TIM LOH
Bloomberg

Natural gas futures climbed to the highest level in two weeks after a government report showed a smaller-than-forecast gain in US inventories. The supply total tied a three-year record.

Inventories increased 52 billion cubic feet in the week ended Oct. 30 to 3.929 trillion, the Energy Information Administration said. Analyst estimates compiled by Bloomberg and a survey of Bloomberg users had predicted an injection of 57 billion. The total tied the previous all-time high set on Nov. 2, 2012.

“As you start to fill up storage, it becomes harder to inject gas because you start to run out of room,” Kent Bayazitoglu, an analyst at Gelber & Associates in Houston. “That gives the market a little bit of a boost.”

Natural gas for December delivery rose 10.2 cents, or 4.5%, to settle at $2.364/MMBtu on the New York Mercantile Exchange, the highest since Oct. 22. Gas traded at $2.312 before the storage number was released in Washington.

The stockpile increase was smaller than the five-year average gain for the week of 58 billion cubic feet, according to the EIA. A surplus to the five-year average narrowed to 3.9% from 4.1% the previous week. Supplies were 10.4% above year-earlier inventories, compared with 11.8% in last week’s report.

The weather will probably be warmer than usual for the eastern half of the US through Nov. 19, according to MDA Weather Services. That could curb demand for the winter heating fuel. 

Gas deliveries to customers, which include power plants, residential and industrial users, jumped 15% to 69.1 billion cubic feet on Wednesday from a week earlier, LCI Energy Insight data show.

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