Natural Gas May Rise as Storage Deficit Widens, Survey Shows

Natural gas futures may advance as a stockpile deficit signals reduced supplies of the power-plant fuel, a Bloomberg News survey showed.

Nine of 19 analysts, or 47 percent, forecast that gas futures will rise on the New York Mercantile Exchange through May 6. Five, or 26 percent, said futures will fall and five predicted that prices will stay the same. Last week, 64 percent of participants said gas prices would decline.

The Energy Department reported yesterday that gas inventories for the week ended April 22 totaled 1.685 trillion cubic feet, 0.6 percent below the five-year average. The stockpile deficit was the first since the week ended Feb. 25.

“The storage deficit is rapidly growing, and it’s going to widen,” said Peter Linder, investment manager of DeltaOne Capital Partners in Calgary. “We’ve seen some slowdown in gas drilling activity. I think prices will go to $4.60 or $4.80 in the near term.”

Natural gas for June delivery gained 10.5 cents, or 2.4 percent, to $4.571 per million British thermal units in the first four days of trading this week on the New York exchange.

Gas inventories were 11 percent below levels a year earlier, the widest year-on-year deficit since Aug. 8, 2008, yesterday’s report showed.

The number of rigs drilling for gas in the U.S. fell by seven to 878 last week, the third consecutive decline, according to data published by Baker Hughes Inc. The rig count is down 4.5 percent this year.

The gas survey has correctly forecast the direction of prices 48 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex natural-gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

9 5 5

(Source: http://www.bloomberg.com/news/2011-04-29/natural-gas-may-rise-as-storage-deficit-widens-survey-shows.html