Wednesday, August 29, 2012

Natural gas futures prices 8/29/2012

Natural gas futures prices 8/29/2012 : Natural gas futures traded near the lowest level since June during U.S. morning trade on Wednesday, as market players continued to monitor tropical storm activity in the Gulf of Mexico, amid easing concerns over a disruption to supplies from the region.

Traders also looked ahead to Thursday’s closely watched U.S. government report on natural gas supplies.

On the New York Mercantile Exchange, natural gas futures for delivery in September traded at USD2.596 per million British thermal units during U.S. morning trade, shedding 0.4%.

It earlier fell by as much as 0.95% to trade at a session low of USD2.572 per million British thermal units, the weakest level since June 22.

The September contract is due to expire at the end of Wednesday’s trading session. Contract expiration often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.

Meanwhile, the more actively traded contract for October delivery eased up 0.3% to trade at USD2.640 per million British thermal units. The October contract fell by as much as 0.8% earlier to trade at a session low of USD2.611.

The U.S. National Hurricane Center said late Tuesday that the Category-1 hurricane hit the coast of southeast Louisiana as it made landfall, likely sparing Gulf Coast oil production facilities from significant damage and easing worries over a disruption to supplies from the region.

The center expects the storm to move northwest later Wednesday.

Energy traders track tropical weather in the Gulf of Mexico, with prices typically spiking in the event it disrupts production.

However, offshore Gulf of Mexico gas output plays a much smaller role in supplying the U.S. than in recent years.

Production in federal waters in the Gulf currently accounts for only 7% of natural gas output, down significantly from 17% in 2005.

The U.S. Atlantic hurricane season began on June 1 and ends November 30.

Meanwhile, market players shifted their focus to the U.S. Energy Information Administration’s closely watched weekly report on natural gas inventories scheduled for Thursday.

Early injection estimates range from 49 billion cubic feet to 62 billion cubic feet, compared to last year's build of 60 billion cubic feet. The five-year average change for the week is an increase of 62 billion cubic feet.

Total U.S. gas supplies stood at 3.308 trillion cubic feet last week, 14.7% above last year’s level and 12.1% above the five-year average level for the week.

Inventory didn't top the 3.3-trillion cubic feet level in 2011 until the end of September, with stocks peaking at a record 3.852 trillion cubic feet in November of last year.

Market analysts have warned that without strong demand through the rest of the summer cooling season, gas inventories will reach the limits of available capacity later this year.

The storage surplus to last year will have to be cut by at least another 150 billion cubic feet in the 14 weeks left before winter withdrawals begin to avoid breaching the government's 4.1 trillion cubic feet estimate of total capacity.

A bout of extreme heat across much of the U.S. over the past two months helped boost natural gas prices above the key USD3.00-level in recent weeks. Prices rallied to a 2012 high of USD3.275 per million British thermal units on July 31.

But futures have come under heavy selling pressure since the start of August, losing almost 15% after extended weather forecasts pointed to milder weather across most parts of the U.S. throughout most of the month.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in October fell 0.85% to trade at USD95.50 a barrel, while heating oil for October delivery dipped 0.15% to trade at USD3.124 per gallon.

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