--Natural gas rises ahead of weekly data on U.S. gas inventories
--Analysts expect a 31-bcf build in U.S. stockpiles
--Gas futures recently trade 2.6% higher at $2.312/MMBtu
By Jerry A. DiColo
Natural gas futures rose Thursday ahead of a weekly government report on U.S. inventories, as investors wager whether cooler temperatures have raised gas-fired heating demand.
Natural gas for June delivery rose 5.9 cents, or 2.6%, to recently trade at $2.312 a million British thermal units on the New York Mercantile Exchange.
U.S. stockpiles are expected to increase by 31 billion cubic feet, according to an analyst survey by Dow Jones Newswires. The data is due Thursday at 10:30 a.m. EDT from the U.S. Energy Information Administration.
If the estimate is correct, inventories as of April 27 will total 2.579 trillion cubic feed, 50% above the five-year average for this time of year and 49% above last year's level.
"If the consensus storage change is not far from the reality unveiled on Thursday morning, the storage overhang should decline," Barclays analysts said in a client note.
Investors keep close watch on weekly U.S. data in order to gauge whether demand for the fuel is increasing, which would likely raise prices. For several months, mild winter weather and high production have pushed natural gas futures to decade lows.
But some analysts believe lows under $2/MMBtu hit last month may have prompted enough producers to curtail output. Last week, the EIA said February production fell by the largest percentage in a year. Meanwhile, Exxon Mobil Corp. and others have said recently that production has declined in the first quarter of this year.
For the latest week, U.S. data are expected to reflect a bout of cool weather that kept temperatures low across much of the country. Roughly half of U.S. homes are heated using natural gas, so low temperatures can have a big impact on weekly fuel usage.
Still, some analysts are skeptical that slowing production will keep prices rising unless extreme weather raises heating and cooling demand.
"This market will require an early start to a hot summer in order to push nearby values much above the $2.50 level," said Jim Ritterbusch, head of trading advisor Ritterbusch and Associates.
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $2.2875/MMBtu, according to IntercontinentalExchange, compared with Thursday's average of $2.3093/MMBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $2.51/MMBtu, down from $2.581/MMBtu.
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; [email protected]