Natural Gas Rises on First U.S. Inventory Drop in Seven Months

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Thu, 16 Nov 2000, 9:08am EST Natural Gas Rises on First U.S. Inventory Drop in Seven Months By Bradley Keoun

New York, Nov. 15 (Bloomberg) -- Natural gas rose more than 4 percent to a record after an industry report showed that U.S. inventories fell for the first time in seven months as colder weather boosted demand for heating fuel.

The report from the American Gas Association confirmed expectations of strengthening demand that have kept gas prices at record levels all week. The first cold wave of the season is moving across the country toward the East Coast, increasing concern that inventories are too low before the winter.

``There's such a tight balance between supply and demand that any kind of headline with the weekly (inventory) numbers is bound to give you a good pop'' in futures prices, said Jay Saunders, associate energy analyst at Deutsche Banc Alex. Brown in Baltimore.

Natural gas for December delivery rose as much as 27.4 cents, or 4.6 percent, to $6.29 per million British thermal units on the New York Mercantile Exchange, the highest price for a most-active contract in 10 years of trading on the Nymex. Prices have risen 44 percent from a 2 1/2-month low on Oct. 31 on supply concern.

U.S. inventories of natural gas fell 6 billion cubic feet, or 0.2 percent, last week to 2.742 trillion cubic feet, the first decline since the week ended April 14, the AGA said. That left supplies 9.1 percent lower than a year ago, wider than the previous week's year-on-year deficit of 8.6 percent.

Prices had soared ``to $6 in anticipation of a small build or a draw in inventories because of cold weather,'' Saunders said. The AGA report ``is kind of verification of that.''

Natural gas prices have more than doubled this year as increased use of gas in manufacturing and electricity generation reduced the amount of fuel available to store for the winter, when demand peaks.

A band of cold weather is moving eastward from the north- central U.S., where it led homeowners to fire up gas heaters. The region -- which includes Illinois, Indiana, Michigan, Ohio and Wisconsin -- accounts for almost 30 percent of U.S. residential gas consumption, according to the Energy Department.

http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Top%20Financial%20News&tp=ad_fin&T=au_storypage99.ht&s=AOhLukBXVTmF0dXJh

-- Martin Thompson (mthom1927@aol.com), November 15, 2000


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