Natural Gas Is Steady Amid Speculation Inventories Increased

By Mario Parker

Aug. 20 (Bloomberg) -- Natural gas in New York was little changed amid speculation a government report tomorrow will show an above-average inventory increase and as Tropical Storm Fay showed signs it probably won't strengthen into a hurricane.

Stockpiles rose 82 billion cubic feet in the week ended Aug. 15, according to the median of 11 analyst estimates compiled by Bloomberg News. The average change for this time of year over the past five is 56 billion. Fay's sustained winds were 50 miles (85 kilometers) per hour, down from 65 mph yesterday, according to a Miamai-based National Hurricane Center advisory. A hurricane watch for the Florida coast was dropped.

``People are anticipating a hefty injection tomorrow,'' said Michael Haigh, senior commodity strategist for Societe Generale in New York.

Natural gas for September delivery rose 1.8 cents to $7.994 per million British thermal units at 12:38 p.m. on the New York Mercantile Exchange. Gas earlier rose as high as $8.181.

On this trading day in 2007, gas closed at $6.04 per million Btu. Futures are 6 percent higher this year.

Futures have declined 41 percent since closing at $13.577 on July 3, a 30-month high. The 200-day moving average is $9.589.

A series of above-average additions to storage means winter supplies will be ample, Haigh said. ``The picture a month or two ago was that we would be way behind last year's level. Things will be pretty healthy from the supply side.''

Inventories totaled 2.567 trillion cubic feet, 6 billion, or 0.2 percent, below the five-year average, the Energy Department said in the week ended Aug. 8. The next report is scheduled tomorrow at 10:35 a.m. in Washington.

Stockpiles rose to a record 3.545 trillion cubic feet in Nov. 2007.

Bearish Number

Traders are now ``pricing in'' a bearish supply number, said Larry Young, a senior trader at Infinity Futures Inc. in Chicago. ``It's kind of a `shoot first and ask questions later' mentality.''

Natural gas also declined after a government report showed the biggest gain of U.S. crude oil supplies in more than seven years.

Stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest jump since March 2001, the U.S. Energy Department said.

Crude oil for September delivery fell $1.04, or 0.9 percent, to $113.49 barrel in New York. Futures touched a 15-week low of $111.34 a barrel on Aug. 15. Prices are up 18 percent this year.

Gas ``will try to trade in sympathy with other energies,'' such as oil, said Young. ``We're waiting on tomorrow's data, so that's going to temper any move.''

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net