N.Y. Natural-Gas Falls Amid Forecasts for Mild U.S. Weather
2004-12-07 11:03 (New York)

By Jim Kennett
     Dec. 7 (Bloomberg) -- Natural gas fell for the sixth time in
seven sessions on forecasts for above-normal temperatures
throughout the U.S.
     Mild weather will dominate the country through Dec. 11, with
the greatest departure above normal on the East Coast for the
next two days, private forecaster Earth Satellite Corp. said.
Such weather means less demand for natural gas to heat homes,
allowing utilities to preserve inventories.
     ``There's only one fundamental this time of year and it's
weather,' said Edward Kennedy, a broker at Commercial Brokerage
Corp. in Miami.
     Gas for January delivery fell 3.3 cents, or 0.5 percent, to
$6.89 per million British thermal units as of 10:54 a.m. on the
New York Mercantile Exchange. The contract has dropped 20 percent
since Nov. 24.
     The most seasonally mild weather will center over the Rocky
Mountains and the Northwest later this week, EarthSat said.
Heating demand nationwide will be 19 percent below normal for the
next week, according to Belton, Missouri-based Weather
Derivatives.
     EarthSat and government meteorologists at the National
Weather Service both are calling for below-normal temperatures
across the eastern U.S. from Dec. 12 to 16. The colder weather
spreads over the Great Lakes and the South in both services'
forecasts through Dec. 20.
     Natural gas also fell alongside crude oil, which helped pull
the contract higher yesterday. Oil fell 1.1 percent today to
$42.50 a barrel in New York.
     Natural gas competes with oil-based fuels among 5 to 10
percent of U.S. factories and power plants. The competitive link
can cause price moves in one market to impact the other.

                         Gas Inventories

     Utilities and manufacturers store natural gas from April to
November and use the surplus to supplement domestic production
and imports in the winter, when demand peaks. Withdrawals from
storage typically begin around Nov. 1.
     Stores of the heating fuel probably fell last week by 75
billion cubic feet, the median estimate of 15 analysts polled by
Bloomberg.
     Inventories in the nation's more than 400 underground
storage caverns and reservoirs are 11 percent higher than normal,
after a mild summer cut air-conditioning needs and demand for
electricity from gas-fired power plants.
     Continued mild weather in November meant that for the month,
utilities had a net gain in supplies of 6 billion cubic feet.
That compares with a net withdrawal last year of 60 billion.

--Editor: Banker.

Story illustration: To graph the front-month Nymex contract, see
{NG1 <Cmdty> GP D <GO>}. For a slide show of natural-gas data,
see {CNP 09101550204 <GO>}. Press the space bar to pause the tour
and <GO> to resume.

To contact the reporter on this story:
Jim Kennett in Houston at (1) (713) 353-4871 or
jkennett@bloomberg.net

To contact the editor responsible for this story:
Robert Dieterich at (1) (212) 893-4485 or
rdieterich@Bloomberg.net.

-0- Dec/07/2004 16:03 GMT