US GAS : Futures Higher In Wake Of Inventory, Production Data
05/31/2012| 03:48pm US/Eastern
--Natural gas snaps four-session losing streak
--Neutral inventory data, bearish production data
--Analyst: Weather outlook signals higher cooling demand
By Dan Strumpf
Natural gas futures edged higher Thursday, snapping a four-day losing streak, after the U.S. government said gas inventories rose broadly in line with expectations.
Natural gas for July delivery settled 0.4 cents, or 0.2%, higher at $2.422 a million British thermal units on the New York Mercantile Exchange.
Futures began the session lower, falling to as low as $2.377/MMBtu, before reversing course in the hours after the 10:30 a.m. EDT inventory data. They extended their gains after the government also said natural-gas production in March fell to the lowest level since October.
Gas stockpiles last week rose 71 billion cubic feet, the Energy Information Administration said.
Analysts surveyed by Dow Jones Newswires expected natural-gas inventories last week rose by 69 billion cubic feet, on average.
Pax Saunders, analyst at Gelber & Associates, attributed the day's rise to expectations of warmer weather ahead, which would likely drive a long-awaited rise in gas-fired cooling demand.
"I think traders are looking past this week's number and into projections for the next couple of weeks--a lot of heat out there," he said.
Still, inventories are at their highest level ever for this time of year after one of the mildest winters on record squelched demand for natural gas used for heating. Stockpiles now stand at 2.815 trillion cubic feet, 35% above both last year and the five-year-average level for this week.
Through the winter and spring prices to slid 10 1/2 year lows, though they have recovered considerably amid growing demand from utilities.
Additional evidence emerged Thursday that natural gas producers have been responding to the recent slump in prices. Output in the lower 48 states dropped 0.4% in March--the second straight monthly decline--to average 71.76 billion cubic feet, the EIA said. That's the lowest level since October.
February production data, meanwhile, was revised downward to 72.02 billion cubic feet from a previous estimate of 72.32 bcf/day.
-By Dan Strumpf, Dow Jones Newswires; 212-416-2818; firstname.lastname@example.org