Natural Gas Futures Are Steady on Outlook for Ample Storage

By Reg Curren

Oct. 21 (Bloomberg) -- Natural gas futures were little changed in New York on signs of ample U.S. supplies of the furnace fuel to start the cold-weather season.

Stockpiles are 85 billion cubic feet, or 2.7 percent, above the five-year average for this time of year, according to the Energy Department. Utilities and industrial consumers may push stored amounts past the five-year average of 3.327 trillion cubic feet by the time the inventory rebuilding period ends Oct. 31.

``We've built a cushion against the five-year average and that will likely stretch again on Oct. 23 and that's enough to keep the bulls at bay,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

Natural gas for November delivery gained 1.6 cents to $6.757 per million British thermal units at 9:33 a.m. on the New York Mercantile Exchange. Gas futures yesterday declined 9.7 percent this year.

Gas inventories probably gained 68 billion cubic feet last week, Stephen Smith, president of Stephen Smith Energy of Natchez, Mississippi, said in an e-mail. The average change over the past five years is an increase of 62 billion cubic feet, according to government data. The Energy Department is scheduled to release its next supply report on Oct. 23.

If the current surplus is maintained until Oct. 31, supplies would reach 3.41 trillion cubic feet, based on department data.

Weather forecasts for the next two weeks are also working against gas price gains, as meteorologists expect temperatures to climb back to normal late next week from below-normal, Ritterbusch said.

``We're not getting any help from the weather factor at all with normal temperatures,'' he said.

Gas prices will probably stay in a range between $6.50 and $7 per million Btu until the November contract expires next week, Ritterbusch said.

U.S. gas inventories increased 79 billion cubic feet in the week ended Oct. 10 to 3.277 trillion cubic feet, an Energy Department report on Oct. 16 showed. Supplies last November reached a record 3.545 trillion cubic feet to start the heating season.

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