Natural Gas Plummets Ahead of Inventories Data

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Natural Gas Plummets Ahead of Inventories Data

Natural gas futures dropped from a two-month peak in New York as investors speculated that government data to be released on Thursday would show a drastic surge in stockpiles of the commodity used for heating in the wake of dwindling demand following mild weather.

Gas plunged as deep as 1.6%.  Data from the Energy Information Administration may show that gas stockpiles added 77 billion cubic feet within the week ended April 25, according to median estimates from eight analysts in a Bloomberg survey.

“Tomorrow’s storage injection will be well above the five-year average. “Temperatures are going to moderate after the weekend, and that’s eroding the bullish case for gas,” said John Kilduf of New York-based Again Capital LLC.

June delivery natural gas declined 6.3 cents or 1.3% to $4.768 per million British thermal units as of 10:05 am on the New York Mercantile Exchange. Trading volumes for all the futures was 26% lower than the 100-day average. The futures have advanced 13% year-to-date and 9% in April. Gas rose to $4.831 per million Btu on Tuesday, the highest exchange rate since February 26.

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On May 7, New York may hit a low of 55 degrees Fahrenheit, 4 lower more than ordinary, and a high of 66, according to forecast by AccuWeather Inc. Chicago temperatures are likely to hit 70 degrees, 3 higher than usual.

An estimated 49% of US homes depend on gas for heating, as per official data. Power plants take in 31% of gas consumption.

As Investing reports, the spring and fall periods witness the lowest demand of natural gas, since mild temperatures mean households don’t consume a lot of gas for heating and air conditioning.

Players in the market will be keenly following tomorrow’s official pronouncements regarding natural gas stockpiles. The supplies might hit 3.422 trillion cubic feet by the end of October, after losing 392 billion since the previous year.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com