U.S. gas: Futures dip ahead of EIA storage report

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Natural-gas futures slipped Thursday as signs of weakening demand added to moderate selling ahead of the government's weekly inventory report.

The Energy Information Administration is expected to report that 80 billion cubic feet of gas were added to storage during the week ended Sept. 9, according to the average prediction of 16 gas analysts and traders in a Dow Jones Newswires survey. That injection would be slightly above the five-year average.

Meanwhile, the National Oceanic and Atmospheric Administration released a three-month forecast projecting warmer-than-average temperatures around Texas and the Great Lakes, which bodes ill for demand from gas-fired furnaces.

Gas for October delivery on the New York Mercantile Exchange was off 0.8%, or 3.3 cents, at $4.006 per million British thermal units in early trade. Prices traded in a tight range between $4.042/mmBtu and $4.007/mmBtu before the EIA report.

Futures prices had fallen amid reports that U.S. electricity grid demand dropped to its lowest level since May last week, helped by cooler temperatures and disruptive storms that cut off power to millions.

Tropical Storm Lee brought cold weather to Texas and Louisiana, allowing lower air conditioning use to offset the effects of production halts in the Gulf of Mexico, an area of diminishing importance in the market.

"We believe that the impact from the cold front outweighs that shut-in production," Summit Energy analyst Eric Bickel said. "All in all, we should see a pretty sizable build."



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