Thursday, May 02, 2013
NEW YORK--Natural-gas futures plunged 7% Thursday after a report showed a steep rise in U.S. gas inventories, suggesting waning demand for the fuel used to heat homes and generate electricity.
Stockpiles last week climbed 43 billion cubic feet to 1,777 bcf, according to the U.S. Energy Information Administration, well above the 30-bcf rise projected by analysts in a Dow Jones Newswires survey.
Natural gas is used to heat roughly half of all U.S. homes. Gas futures have risen sharply this year after a prolonged spell of below-normal temperatures kept demand elevated well into spring.
But signs have emerged that demand has begun to wane. One measure of heating demand, called "heating degree days," rose to 49 from 22 last week across much of the southern U.S., according to Bentek Energy, a consulting firm. Such a rise would lead market watchers to expect more heating demand. But that didn't occur.
"You would assume that would cause an increase in heating load," said Logan Reese, senior analyst at Bentek. "But the EIA data this week would confirm it did not result in more heating load."
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