Upside?Natural Gas Futures Advance on Signs Recession Is Easing
By Elizabeth Campbell and Mario Parker
June 5 (Bloomberg) -- Natural gas futures rose in New York after a government report showed the U.S. lost fewer jobs in May than forecast.
Gas advanced as payrolls fell by 345,000, the least in eight months, according to the Labor Department in Washington. A recovery would boost demand for gas from factories and power plants, which account for 58 percent of demand.
“Traders that are buying into this jobs report are buying into the hope that the economy’s recovering,” said Carl Neill, an energy analyst at Risk Management Inc. in Chicago.
Natural gas for July delivery rose 5.6 cents, or 1.5 percent, to $3.866 per million British thermal units at 11:32 a.m. on the New York Mercantile Exchange. Futures rose yesterday after a separate jobs report pulled commodities higher. Prices have risen 1 percent this week.
Payrolls were forecast to drop 520,000 after a 539,000 decrease initially reported for April, according to the median of estimates by 76 economists surveyed by Bloomberg News. Job losses peaked at 741,000 in January, the most since 1949.
“The U.S. economy is definitely in a turnaround,” said Peter Linder, president of DeltaOne Energy Fund in Calgary. “The key is that despite a huge surplus of natural gas in storage facilities, which the market continues to look at, I believe that the supply-demand balance will be much more favorable in coming months.”
Stockpiles rose 124 billion cubic feet in the week ended May 29 to 2.337 trillion cubic feet, the Energy Department said yesterday. Supplies were 22 percent higher than the five-year average.
“Your downside is very limited right here and your upside is unlimited,” saidMichael Rose, a director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida.