(Bloomberg) -- Soaring U.S. natural gas output probably expanded stockpiles of the fuel by the most seasonally in three years as mild spring weather curbed demand.
Inventories climbed by 90 billion cubic feet last week, based on the median of 10 analyst estimates compiled by Bloomberg. All but one predicted the gain would exceed the five-year average of 75 billion for the period.
Though stored gas supplies are 28 percent below normal for the time of year after a frigid April boosted consumption of the heating fuel, production from shale basins has surged to a record. Traders and analysts are keeping a close eye on weekly changes in storage as a sign of whether output will overwhelm demand and send prices plunging, even as the U.S. exports more gas to Mexico and overseas buyers.
“The make-or-break point in the market is going to occur within the next two reports,” said Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania. If gains in storage are “super high, I won’t be long gas.”
Bearish data could send prices toward $2.25 per million British thermal units, he said. That’s down 18 percent from Monday’s closing price.
Schork correctly predicted last week’s storage increase of 62 billion, even as most analysts predicted a smaller build. For the next report, he’s expecting a gain of 114 billion, which would break the record for the time of year. Bloomberg New Energy Finance, meanwhile, has a preliminary estimate of 78 billion.
Gas inventories totaled 1.343 trillion cubic feet on April 27. The U.S. Energy Information Administration’s weekly storage report is due Thursday in Washington.
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