DJ. Nymex Gas Futures Hit By EIA Storage Revision
By Spencer Jakab
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Natural gas futures prices fell on the New York
Mercantile Exchange on Thursday following the release of the Energy Information
Administration's weekly storage data and its widely anticipated new
methodology.
Despite a storage injection number that was below market expectations,
natural gas futures sold off following the release as inventories were revised
up by 38 billion cubic feet. Today was the first day of trading with December
futures as the front month contract.
"The market ticked up initially, but the revision set the tone for the rest
of the day," explained Chris McCormack, a trader at ABN Amro in New York.
A Dow Jones survey of 14 analysts and traders had an average and mean
expectation of a 66 Bcf injection, while the actual injection reported was only
55 Bcf, normally a bullish development. But, as a result of the supposedly more
accurate survey, inventories are now thought to have been 38 Bcf higher last
week, meaning there is more gas in storage than thought. The data were revised
through the week ending July 4.
The market cares about how much gas is actually in storage and not a
historical number of how much was used, so it was rudely surprised that there
was a net 27 Bcf more storage in inventory than it had predicted last Friday
and 38 Bcf more than the previous Friday.
Keeping in mind that average daily usage is about 60 Bcf, this discrepancy is
small in the scheme of things (0.1% of annual usage). It seems, however, to
have had a psychological impact on the gas futures market.
"If it was nothing, the reaction wouldn't have been so violent," said
McCormack.
Agbeli Ameko, managing partner of Enercast.com, called it a "knee-jerk
reaction." He pointed in vain more to the bullish implications of the lower
weekly injection number itself, which "shows that the rate of refilling is
slowing down."
The December Henry Hub natural gas futures contract on the New York
Mercantile Exchange settled at $4.710 per million British thermal units, down
14.8 cents but well above the day's low of $4.645 following the storage report.
The longer-dated futures fell in line with the front-month contract. January
futures fell 15.5 cents to $4.948 and February fell by 13.6 cents to $4.968.
Physical gas at the benchmark Henry Hub averaged the session at $4.393/MMBtu,
down about 5 cents from yesterday's average. The discount of cash to futures is
now about 31-32 cents.
-By Spencer Jakab, Dow Jones Newswires; 201-938-4377;
spencer.jakab@dowjones.com |
