02 September 2010 16:51 [Source: ICIS news]
(ICIS news)--US working natural gas in storage rose by 54bn cubic feet in the week ended 27 August to reach 3,106bn cubic feet, maintaining the above-average trend, the Energy Information Administration (EIA) said on Thursday.
The week-over-week increase was in line with analysts expectations of a gain of 50bn-60bn cubic feet, it and puts working gas in storage 169bn cubic feet - or 5.8% - above the five-year average for this time of the year.
Although the total is still below the record figures seen in the shoulder-season months of late 2009, the latest increase underlines an ample supply picture that has been pulling prices down.
The front-month gas futures contract plunged a hefty 22% in the month of August alone.
The October gas futures contract had been just above Wednesday's close before the data was issued, but has since slipped to be down 1.3 cents at $3.749/MMBtu around 15:15 GMT.
That eclipsed the spot margin for naphtha-based ethylene, which only gained 11% to 17.32 cents/lb.
Using the EIA's factor of 5.8 to compare the energy content of natural gas and crude oil, natural gas in the US is currently around one-third the cost of its competitor.
The growth in natural gas inventories has come despite improving industrial demand, which accounts for more than a quarter of US natural gas consumption.
But most economic news in the last week has been negative for natural gas prices, including an acknowledgement by the chairman of the Federal Reserve Board that the US economy recovery has progressed at a slower pace than policymakers anticipated.
Another factor undercutting sentiment in the natural gas market has been the relatively benign outcome of the hurricane season so far, with the latest two named storms heading up the eastern seaboard and missing the Gulf of Mexico's offshore production facilities.
Warmer-than-normal temperatures earlier this week and in August are also giving way to forecasts for cooler weather, including in the northeast US where Hurricane Earl is expected to dump heavy rain.
($1 = €0.78)
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