Natural gas futures tumbled, headed for its worst month in more than two years, amid ample stockpiles and reduced likelihood that a hurricane will curtail production in the Gulf of Mexico.
Prices dropped a ninth day in the last 10 on anticipation a Conference Board report will show consumer confidence hovered near a five-month low. U.S. gas inventories last week were 6.2 percent higher than the five-year average, according to Energy Department data.
“The bears are definitely in control of this market and there’s no reason for them to let up,” saidJulio Sera, vice president of energy trading at Hencorp Energy Group in Miami. “Storage is getting filled up and there doesn’t appear to be any demand to pull us out of this slump.”
Natural gas for October delivery fell 8 cents, or 2.1 percent, to $3.732 per million British thermal units at 9:44 a.m. on the New York Mercantile Exchange. Prices have dropped 24 percent this month, the steepest decline since July 2008 when the decline was 32 percent.
Gas pared its losses briefly after the S&P/Case-Shiller index of property values increased 4.2 percent from June 2009, above the 3.5 percent forecast according to the median estimate of economists surveyed by Bloomberg News.
Sera said traders are anticipating that Earl, one of the two strongest hurricanes of the Atlantic season, will avoid refineries in the Gulf of Mexico, which produces 10 percent of U.S. natural gas. The hurricane season lasts from June through November.
Gas stockpile levels rose by 40 billion cubic feet in the week ended Aug. 20 to 3.052 trillion cubic feet, the Energy Department said last week. Inventories at the end of October will climb to 3.752 trillion cubic feet, according to the agency. Stockpiles rose to a record 3.84 trillion in November 2009.
“Natural gas appears to be set to be in the doldrums for the foreseeable future,” Sera said.
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