April 19, 2013

Natural gas may decline next week as mild weather reduces demand for the heating and power-plant fuel, a Bloomberg survey showed.

Seven of 11 analysts, or 64 percent, forecast that futures will fall on the New York Mercantile Exchange through April 26. Three, or 27 percent, said gas will stay the same and one predicted prices will rise. Last week, 58 percent of participants said gas would drop.

Temperatures will be above normal along the West Coast next week and seasonal in the Northeast and mid-Atlantic states, said MDA Weather Services in Gaithersburg, Maryland. The central states may see cooler-than-normal weather. Gas prices have gained 9.4 percent so far this month as an early spring cold snap spurred demand for heating, reducing seasonal injections into storage facilities.

“Without a strong fundamental driver, such as weather- related demand, investors will likely be tempted to take profit from the month-to-date rally,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “However, we don’t anticipate a large drop in prices but rather a slow deterioration until such time that the inventory injections begin to pick up.”

Natural gas futures for May delivery jumped 18.7 cents, or 4.4 percent, to $4.401 per million Btu in New York yesterday, the highest settlement since July 20, 2011. Prices increased 4.2 percent during the first four days of this week, headed for the ninth straight weekly gain in a record streak going back to April 1990, according to data compiled by Bloomberg.

Stockpile Deficit

Gas stockpiles rose by 31 billion cubic feet to 1.704 trillion cubic feet in the week ended April 12, below the five- year average gain of 39 billion, the EIA reported yesterday. Analyst estimates compiled by Bloomberg forecast an increase of 38 billion. It was the first supply gain of the year.

Supplies were 32 percent below year-earlier levels, the widest deficit based on EIA data going back to 2005. Stockpiles dropped to 4.2 percent below the five-year average, the biggest such gap since February 2011.

The gas survey has correctly forecast the direction of prices 50 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex natural-gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:


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