NEW YORK (Dow Jones)--Natural-gas futures plummeted Thursday after the government reported a larger-than-expected injection to domestic stockpiles.
The Energy Information Administration said U.S. natural-gas stockpiles rose by 87 billion cubic feet last week, above the 80 bcf predicted by analysts surveyed by Dow Jones Newswires.
Gas for October delivery settled down 16.1 cents, or 4%, at $3.878 a million British thermal units on the New York Mercantile Exchange. Prices ended at their lowest levels since their Sept. 2 settlement.
The steep decline likely reflected the market blowing off pressure after this week's price run-up, research firm Gelber & Associates wrote in a note.
The firm added the high prices may have further to fall.
"The real banger for the bears lies in the next two [storage] reports," the firm said.
The National Oceanic and Atmospheric Administration on Thursday also released a warmer-than-average three-month forecast for Texas and much of the Midwest, cutting down on the potential need for gas-fired heating.
A tropical storm in the Gulf of Mexico earlier this month slightly curtailed offshore gas production, leading to predictions of smaller gas injections. But the cyclone had a bigger impact on the demand side as Gulf Coast residents used less air conditioning during the cool spell.
The storm highlighted the dwindling significance of the Gulf region for domestic gas, most of which now comes from onshore shale formations, and put more focus on demand.
"Power fell a lot more than we thought last week," Jefferies & Co. analyst Subash Chandra said. "Even though coal use went down, power demand went down more."
Cold weather sweeping much of the Midwest had helped lift the benchmark contract over the past three days, but many analysts say the temperatures sinking into the 30s will not be enough nudge up demand.