Natural-gas futures pared its steepest losses, but remained in negative
territory Thursday after a higher-than-expected increase in weekly
domestic gas stockpiles.
Natural gas for September delivery was down 5.4 cents, or
1.6%, to recently trade at $3.392 a million British thermal units on the
New York Mercantile Exchange.
The U.S. Energy Information Administration Thursday said gas
stockpiles rose by 59-bcf for the week ended July 26. The build is
higher than the 57-bcf that was expected to be added to storage,
according to estimates by a Dow Jones survey of analysts.
"The 59-bcf [injection] is a big number for this time of the
year," said Stephen Schork, editor of energy newsletter The Schork
Report.
Utilities' demand for gas-fired electricity typically
increases in the summer as businesses and homes increase
air-conditioning use. But natural-gas prices have settled lower for the
past five of six sessions due to the persistence of below-normal
temperatures.
Shortly after the data was released natural gas prices fell
sharply to as low as $3.341, its lowest since Feb. 25. But it cut some
of those losses in the hour or so after. "A lot of the short-term
traders sold futures after the numbers came out. Some of them have now
bought it back," said Tom Saal, senior vice president of energy trading
at INTL FCStone.
Updated weather forecasts Thursday said cooler temperatures
across important gas consuming regions in the U.S., spanning the Plains
and Midwest to the East, are expected to continue through to mid-August.
"At this point there is little reason to believe an abrupt flip away
from this pattern will unfold," said private forecaster MDA in its
six-to-10-day forecast.
Last week's gas inventories were both higher than the 28-bcf
injection for the same week last year and the 47-bcf five-year average
injection for that week.
Analysts see the inventory build as the start of a trend which
will continue till the end of August. "It appears that the next string
of injections will also significantly outpace the five-year average,"
said Teri Viswanath, senior natural gas strategist at BNP Paribas.