US Gas: Futures Fall On High Supplies

By Matt Day
   Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Natural gas futures fell Monday as high supplies and temperate weather continued to weigh on the market.
Natural gas for November delivery fell 2.7 cents, or 0.8%, to $3.305 a million British thermal units on the New York Mercantile Exchange. The benchmark contract has plunged 33% since the beginning of August, as mild autumn weather reduced demand for the fuel and bloated inventories.
"Until we get some dramatic weather, or some sort of disruption in supply, the market is developing a $3 to $4 range," said Rich Ilczyszyn, a senior market strategist with Chicago-based Lind-Waldock. "That's where we're going to be pinned."
Futures have rallied above $6/MMBtu during each winter since the 2003. But U.S. natural gas inventories have increased by more than average for six consecutive weeks, pushing futures lower and stifling attempts at a seasonal rally so far. Temperate autumn weather has also pressured futures.
"In a nutshell, we have plenty of supply and nothing fresh or new about demand, which has been slack for two years plus," said Peter Beutel, of energy-advisory firm Cameron Hanover, in a client note.
Tropical Storm Richard made landfall in Central America over the weekend. The storm is expected to weaken as it moves northwest toward southern Mexico, and will likely enter the southern tip of Gulf of Mexico on Monday or Tuesday, the National Hurricane Center said. The storm is not seen as a threat to the energy producing areas in the Gulf. Gas prices can spike if tropical storms shut in production there.
Meanwhile, Berry Petroleum Co. (BRY) agreed to acquire interests in about 9,300 net acres in the Wolfberry trend in West Texas from undisclosed sellers for $180 million. Proved and probable reserve estimates for the properties are about 35 million barrels of oil equivalent, with crude oil accounting for 76% of the total.
The oil and gas producer has made $313 million of acquisitions this year in the Wolfberry trend, bringing the company's holdings there to about 19,350 acres.