Inventories feel(.2%) for the first time since April and its colder this week. Prices will continue to climb until the weather moderates. MCLD I like as a short term bounce off 15. Not sure they will ever make money.
Wed, 15 Nov 2000, 5:13pm EST
11/15 16:35
Natural Gas, Heating Oil Surge as U.S. Inventories Decline
By Bradley Keoun
New York, Nov. 15 (Bloomberg) -- Natural gas rose more than 4 percent to a record, and heating oil also gained, after reports of falling inventories and cold weather spurred concern that winter supplies may be tight.
The American Gas Association confirmed expectations of strengthening demand that have kept gas prices at record levels all week. Cold weather that caused gas demand to jump in the Midwest now is moving east, where heating oil use is greatest.
``If it continues to stay cold, we should continue to see high prices,'' said Peter Tindell, a broker at Starsupply Petroleum Inc. in Englewood, New Jersey.
Natural gas for December delivery rose 24.9 cents, or 4.1 percent, to $6.265 per million British thermal units on the New York Mercantile Exchange, the highest closing price for a most- active contract in 10 years of trading. Prices rose as high as $6.32, a record intraday high, and have more than doubled from a year ago.
U.S. inventories of natural gas fell 6 billion cubic feet, or 0.2 percent, last week to 2.742 trillion cubic feet, the first decline since the week ended April 14, the AGA said. That left supplies 9.1 percent lower than a year ago, wider than the previous week's year-on-year deficit of 8.6 percent.
Heating oil for December delivery rose 2.3 cents, or 2.2 percent, to $1.0771 a gallon on the Nymex, the highest closing price since Oct. 12. Heating oil has rallied 62 percent in the past year and 14 percent so far this month.
Supplies of heating oil last week fell 1.4 percent to 46.8 million barrels, 31 percent lower than a year ago, the American Petroleum Institute said late yesterday.
Falling Inventories
U.S. supplies of distillate fuels, including heating oil and diesel, fell 55,000 barrels to 115.2 million barrels in the week ended Nov. 10, the API said after trading yesterday. Ten analysts polled by Bloomberg had expected an increase of as much as 700,000 barrels, or 0.6 percent.
Natural gas prices have risen 43 percent from a 2 1/2-month low on Oct. 31 as cold weather in the Great Plains began moving eastward toward major population centers in the north-central U.S., the largest market for gas heat. Prices could rise as high as $7.50 per million Btu by the end of the year, said David Chang, managing director of energy trading at Bank of America in New York.
``Temperatures from the Rockies to the East Coast through the end of the Thanksgiving weekend, and maybe to the end of the month, are going to average 10 to 20 degrees below normal,'' said David Tolleris, a meteorologist and owner of Windsong Forecast, a weather risk management firm in Richmond, Virginia.
Prices had soared ``to $6 in anticipation of a small build or a draw in inventories because of cold weather,'' said Jay Saunders, associate energy analyst at Deutsche Banc Alex. Brown in Baltimore. The AGA report ``is kind of verification of that.''
Demand for gas usually weakens during the summer, allowing gas companies to store fuel for the winter, when demand peaks. This year, increased use of gas in manufacturing and electricity generation limited the amount of gas available to store for the winter, while North American gas wells produced little additional supply.
The band of cold weather is now moving eastward from the north-central U.S., where it led homeowners to fire up gas heaters. The region -- which includes Illinois, Indiana, Michigan, Ohio and Wisconsin -- accounts for almost 30 percent of U.S. residential gas consumption, according to the Energy Department. |
