Natural gas reserves drop above expectations

Natural gas fell to a 5 1/2-month low on Thursday as the EIA reported in its weekly report that the U.S. natural gas stockpiles gained more than analysts expected in the week ending August 2 and surpassed the five-year average amount of gas held in underground storage hubs.

On the New York Mercantile Exchange, natural gas for September delivery dropped to $3.239 per million British thermal units at 14:57 GMT, down 0.26% on the day. Futures fell to a days low of $3.134 per Mmbtu minutes after the data was released, the lowest since February. Days high stood at $3.257 per Mmbtu. The fuel plunged 2.02% on Wednesday, an eleventh consecutive daily decline, and extended its current weeks fall to over 3% after shedding 11.7% the preceding two five-day periods.

Natural gas fell for a twelfth day on Thursday as the Energy Information Administration reported that U.S. gas stockpiles rose by 96 billion cubic feet in the week ending August 2, surpassing analysts expectations. Total inventories equaled 2 941 billion cubic feet, 9.2% below last years 3 238 billion cubic feet during the comparable week. Last weeks figure however rose 0.7% above the five-year average storage at 2 921 billion cubic feet.

According to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos., EIAs report was expected to show a rise in stockpiles in a range between 74 billion and 78 billion cubic feet. Last weeks 96 billion increase surpassed market expectations and was also well above the previous years increase and the five-year average gain, both at 42 billion cubic feet.

The Energy Information Administration also reported that inventories in the Producing Region received a net injection of 15 billion cubic feet and were 76 billion above the five-year average of 973 billion. In the East Region, stockpiles rose by 58 billion cubic feet and were 105 billion below the five-year average.

Meanwhile, weather forecasting models continued to point at below-normal temperatures for the season across the U.S. Northeast and Midwest over the next six-to-ten days. When above-normal temperatures are expected, natural gas surges as increased electricity demand to power air-conditioning calls for more supply of the fuel, which is used for a quarter of the U.S. electricity generation. Mild temperatures have the opposite effect.