Natural Gas Falls as U.S. Report May Show Ample Winter Supply

By Reg Curren

Sept. 25 (Bloomberg) -- Natural gas futures declined for a second day on expectations a U.S. government report today will show supplies are sufficient to meet demand this winter.

Stockpiles probably rose 63 billion cubic feet in the week ended Sept. 19, according to the median of 20 analyst estimates compiled by Bloomberg. Inventories the previous week stood at 2.972 trillion cubic feet, 2.1 percent above the five-year average, according to the Energy Department.

``There's a perception that supplies are ample,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``Even if we had no injection, we'd likely still be above the five-year average.''

Natural gas for October delivery fell 15.9 cents, or 2.1 percent, to $7.52 per million British thermal units at 9:24 a.m. on the New York Mercantile Exchange. The October contract expires tomorrow. The November futures contract fell 15.3 cents, or 1.9 percent, to $7.755 per million Btu.

The Energy Department's weekly gas supply report is scheduled for release at 10:35 a.m. in Washington.

Gas also followed crude oil lower, after a petroleum report yesterday showed reduced fuel demand.

Oil for November delivery fell $1.50, or 1.4 percent, to $104.23 a barrel in New York.

``Gas is taking a cue from oil before the storage report,'' Flynn said. ``It's pressuring all energies.''

The pace of gains for winter storage of natural gas has slowed because of storms in the Gulf of Mexico. Lower demand because of blackouts from those same storms and mild weather have limited the pinch on supplies.

About 57 percent of daily gas production from the Gulf of Mexico, was still offline yesterday because of hurricanes Ike and Gustav, a government report showed. The region accounts for 7.4 billion cubic feet of gas a day, or about one-seventh of U.S. production.

To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.