The main reason gas prices dropped yesterday was due to a government report showing an unexpected gain in U.S. stockpiles.
The Energy Department report yesterday showed that supplies rose 3 billion cubic feet in the week ended March 20 to 1.654 trillion cubic feet. Stockpiles typically drop to 1.364 trillion cubic feet at the end of the heating season in late March or early April, based on the five-year average. Analysts forecast a drop of 10 billion. The average for this time of year is a decline of 49 billion because of heating-fuel demand at the end of the cold-weather months.
Industrial users and power plants each account for about 29 percent of gas consumption, according to the Energy Department. The department has forecast a 5.1% decline in industrial usage of gas for 2009 as the economy shrinks.
The bottom line: natural gas stockpiles are 20% above the five-year average and 29% higher than a year earlier, yesterday’s report showed. Supplies in yesterday’s report were 21 percent higher than that total. The iPath Natural Gas ETN (NYSEARCA:GAZ) is down from $83 last July to a bit over $18.