N.Y. Natural Gas Falls as Demand Slips, Inventory, Imports Rise
2007-05-21 12:46 (New York)
By Amy Strahan
May 21 (Bloomberg) -- Natural gas futures declined in New
York as mild weather across much of the nation reduced demand,
inventories of the fuel increased and liquefied natural gas
imports rose.
``It's going to be a very mild week,'' said Stephen A.
Smith, of Stephen Smith Energy Associates, in an interview ahead
of the opening of the market. ``The surplus will keep building
for at least a couple more weeks.''
Gas for June delivery fell 5 cents, or 0.7 percent, to
$7.891 per million British thermal units at 12:38 p.m. on the New
York Mercantile Exchange. Gas rose as high as $8.23 May 18 before
settling at $7.944.
``We've been in this range for week or so now. It's going to
move with the weather,'' said Scott Sitter, a trader with Enserco
Energy Inc. in Denver. ``We're probably trading around the lower
end of the range. We could go anywhere from $7.80 to $8.35 or
$8.37 -- that's all just technical trading.''
A Bloomberg analysis shows current gas prices remain on the
low end of the trading range. Intraday trading on May 18 moved in
a range between $7.891 and $8.23 per million British thermal
units.
``It might see $7.80 until we get some hot weather in the
Midwest or Northeast,'' said Peter Linder, who manages DeltaOne
Energy Fund in Calgary. ``I see a temporary pause before a strong
run up toward $10 early this summer.''
U.S. energy demand will run 6 percent below normal
throughout the next week, according to Belton, Missouri-based
Weather Derivatives.
Warm, Not Hot
``It's warm, not hot,'' said Rod Ferguson, senior
meteorologist for WSI Corp., based in Andover, Massachusetts.
MDA EarthSat Energy Weather, based in Rockville, Maryland,
is forecasting a cooling trough to sweep across the U.S. Midwest
toward the latter part of the week.
Unless there's an unusually hot summer or hurricanes shut in
supplies, storage levels should remain high, Smith said.
Nationwide stockpiles climbed 95 billion cubic to 1.842
trillion cubic feet in the week ended May 11, keeping a surplus
of 21 percent above the five-year average for this time of year,
a U.S. Energy Department report last week showed.
Inventories remain higher than average in part because of
higher U.S. imports of liquefied natural gas coming from lower-
priced markets in the North Sea and elsewhere, according to
Darren Horowitz, an analyst with Raymond James and Associates in
Houston.
LNG Imports Climb
``It's really been something to consider this year,''
Horowitz said. He estimated the U.S. imported nearly 4 billion
cubic feet per day of LNG in the week ended May 18, up from 2.4
billion cubic feet per day at this time last year.
``Obviously there are some weaker areas in the North Sea and
Europe, where gas prices are cheaper,'' Horowitz said. ``You've
seen a lot of cargoes deferred and a lot of that liquid natural
gas found its way into our markets.''
Smith is predicting an injection of about 100 billion cubic
feet of gas in this week's inventory report.
Horowitz, who is expecting this week's injection somewhere
in the range of the ``high 90s to low 100s'' in billion cubic
feet, said LNG is playing a larger role in keeping U.S. storage
levels high.
--Editor: Mullen.
Story illustration: To graph the front-month Nymex gas contract,
see {NG1 <Cmdty> GP D <GO>}. For other energy-related news, click
{ETOP <GO>}.
To contact the reporter on this story:
Amy Strahan in Houston at +1-713-353-4872 or
astrahan@bloomberg.net.
To contact the editor responsible for this story:
Bill Banker at +1-212-617-2313 or
bbanker@bloomberg.net
-0- May/21/2007 16:46 GMT |
