U.S.CONSUMED A RECORD
Natural-gas prices climbed on Thursday after new data raised some concerns about producers' ability to meet future demand.
Gas for May delivery rose 6.9 cents, or 1.5%, to settle at $4.655 a million British thermal units on the New York Mercantile Exchange. Trading was volatile—after falling early in the day, prices soared as much as 4% following the release of U.S. inventory data.
Last week, more gas flowed into storage than was taken out for the first time this year. Analysts had expected the increase would be 14 billion cubic feet; instead, stockpiles grew by 4 billion cubic feet, the U.S. Energy Information Administration said in its weekly storage report.
"This is very disconcerting. It's a slow start," said Teri Viswanath, natural-gas strategist at BNP Paribas. "The industry is going to have to work that much harder to ensure" there is enough gas in storage before the start of next winter, she said.
The U.S. consumed a record amount of natural gas last winter, as freezing temperatures spurred demand for gas-fired heating. About half of U.S. households rely on natural gas to heat their homes, according to the EIA.
Analysts cautioned against reading too much into the EIA report, with robust production expected in the many months ahead. Last week saw extended heating demand in several Midwestern and eastern seaboard states, where cooler-than-normal temperatures have lingered despite the start of spring, analysts said.
"The market is likely overreacting to a disappointing number," said Kent Bayazitoglu, director of market analytics for research consultancy Gelber & Associates, in a note. There is plenty of time for gas to be put into storage, he said.
Still, gas stockpiles are at an 11-year low. The EIA expects supplies to reach 3.4 trillion cubic feet by the end of October, but that would be the lowest for that time of year since 2005.
Market prices have begun to reflect potential shortfalls. Though well off their winter highs, gGas futures are 14% above year-ago levels. Prices for autumn- and winter-month futures are beginning to tick up in tandem with the near-term contracts. Natural gas for October delivery rose 1.7% Thursday, even more than futures prices for May.
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