US GAS: Futures Slip Ahead Of EIA Storage Data

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NEW YORK (Dow Jones)--Natural gas futures were slightly lower Thursday ahead of government data expected to show the first build in U.S. gas inventories of 2010.

Natural gas for April delivery on the New York Mercantile Exchange was trading 2.4 cents lower, or 0.58%, at $4.081 a million British thermal units after opening 2.3 cents lower at $4.082/MMBtu.

The U.S. Energy Information Administration is expected to report that 11 billion cubic feet of gas were added to storage during the week ended March 19 because of unusually mild weather last week in the major gas-consuming regions, according to the average prediction of 18 analysts and traders in a Dow Jones Newswires survey.

The EIA is scheduled to release its storage data Thursday at 10:30 a.m., EDT.

"We are working our way up to Nat Gas storage at 10:30, which any way you slice it looks bearish," wrote Drew Wozniak, an analyst with ICAP Energy in Louisville, Ky., in a note to clients Thursday.

The survey's median was 10 billion cubic feet, with a high of a 40 bcf injection and a low of a 2 bcf build. The projection would represent an early start to the injection season, when moderate spring temperatures lead to weekly builds in gas inventories. During the same week last year, 1 bcf was pulled from storage, and the five-year average for the week was a 37 bcf draw.

If the storage estimate is correct, inventories as of March 19 will total 1.626 trillion cubic feet, 8% above the five-year average and 1.6% below last year's level.

The gas market could dip below $4/MMBtu on a larger-than-normal injection, but futures are likely to get some support from traders covering their positions as the April contract expires, said Mike Rose, the director of the energy trading desk with Angus Jackson Inc., a Fort Lauderdale, Fla.-based brokerage. Traders have been betting heavily on falling gas prices, and many traders are buying back previously sold contracts to take advantage of low prices, Rose said.

The April Nymex gas futures contract expires on March 29.

"A lot of traders and producers had that $4 level in mind as a level they wouldn't mind owning natural gas at," Rose said.


-By Christine Buurma, Dow Jones Newswires; 212-416-2143; christine.buurma@dowjones.com




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