Futures rise as U.S. gas inventory decline tops expectations
--EIA reports U.S. stockpiles fall by 20 bcf last week
--Analysts had seen 12-bcf decline
By Jerry A. DiColo Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Natural gas futures rose Thursday after government data showed a larger-than-expected drop in U.S. gas stockpiles, suggesting an increase in gas-fired heating demand.
The U.S. Energy Information Administration reported that 20 billion cubic feet of natural gas were drawn out of storage in the week ended Dec. 2, topping the 12-bcf draw expected in a survey of analysts.
Though inventories remain elevated compared to last year, and well above the five-year average, traders took the report as a signal that colder weather was beginning to spur an increase in use of the fuel for heating homes and businesses.
Natural gas for January delivery rose 9.6 cents, or 2.8%, at $3.517 a million British thermal units on the New York Mercantile Exchange, after rising as high as $3.550/MMBtu immediately following the data release.
Natural gas futures typically rise into the winter months as gas-fired heating demand surges with colder weather. But high production across the U.S. combined with above-average temperatures pushed supplies to record levels. The situation has kept a lid on futures prices, which have traded near 10-year lows for this time of year.
Prices are expected to begin moving higher as winter weather sets in, but few expect a surge into next year.
Goldman Sachs on Thursday cut its 2012 natural gas price forecast to $3.70/MMBtu from $4.25/MMBtu due to "strong expected growth in shale gas production."
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