By Christine Buurma – Nov 29, 2010 7:42 AM PT
(Source: Bloomberg) Natural gas futures declined in New York on speculation that above-normal supplies will limit price gains during the winter heating season.
Gas inventory levels in the week ended Nov. 19 were 9.5 percent above the five-year average, wider than a 9.3 percent surplus the previous week, the Energy Department said on Nov. 24. Colder-than-normal weather may blanket most of the eastern and central U.S. from Dec. 4 through Dec. 8, according to Commodity Weather Group in Bethesda, Maryland.
“The market knows we can handle just about anything Mother Nature can throw at us this winter,” said Phil Flynn, an analyst with PFGBest in Chicago. “We haven’t seen a price level that has caused natural gas production to fall off dramatically.”
Natural gas for January delivery dropped 3 cents, or 0.7 percent, to $4.369 per million British thermal units at 10:23 a.m. on the New York Mercantile Exchange after reaching $4.487, the highest intraday price since Aug. 9. Gas futures are down 22 percent this year.
Temperatures may be below-normal in the Southeast from Dec. 9 through Dec. 13 and normal in the Northeast and most of the Midwest during that period, Commodity Weather Group said.
The high temperature in New York on Dec. 6 may be 44 degrees Fahrenheit (7 Celsius), 2 degrees below normal, according to AccuWeather Inc. in State College, Pennsylvania. The high in Chicago may be 41, 2 degrees above normal.
About 52 percent of U.S. households use natural gas for heating, according to the Energy Department.
U.S. gas stockpiles fell 6 billion cubic feet in the week ended Nov. 19 to 3.837 trillion cubic feet, last week’s Energy Department report showed.