An abundance in natural gas supplies pushed prices to an 11-month low Friday.
The Energy Department’s Energy Information Administration said in its weekly report that natural gas in underground storage grew by 111 billion cubic feet to 3.312 trillion cubic feet for the week ended Sept. 23.
According to the Dow Jones Newswires, analysts expected a rise of 99 billion and 103 billion cubic feet. The inventory level was 0.2 percent above the five-year average of 3.307 trillion cubic feet, and 2.7 percent below the year-ago level of 3.403 trillion cubic feet, according to the government data.
Prices shed 2.2% on the day and 4.2% over the past three days as a higher-than-expected buildup in inventories overwhelmed sluggish demand in the seasonal lull between summer cooling demand and winter heating needs.
Front-month natural gas futures ended for the second straight week at the lowest level since Oct. 27, 2010. Pressure mounted on the market as the Energy Information Administration reported Thursday that injections of natural gas into storage were about 10% higher than expected last week and more than 56% above the five-year average.
Natural gas for November delivery on the New York Mercantile Exchange settled down 8.1 cents, or 2.2%, at $3.666 per million British thermal units. The drop was the biggest in a single day since Sept. 15.
The last gain in storage was enough to push gas inventories above their five-year average for the first time since April. Inventories now are 5 billion cubic feet above a year ago, compared with a year-to-year deficit of 35 billion cubic in the week-earlier period.
Meantime, the EIA said natural gas output rose in July, with production in the Lower 48 states hitting a record. High output and weak demand will continue to push up storage in coming weeks, traders said.
The number of rigs drilling for natural gas in the U.S. rose by 11 from a week earlier, to 923, oil-field service company Baker Hughes Inc. (BHI) said Friday. The gas rig count was down 39 from a year earlier.
“Bulls are running in a wall of large storage reports,” Pax Saunders, analyst at Gelber and Associates, said.
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