Natural Gas Slips on Low Supply Increase

The Energy Information Administration said natural gas supplies gained 29 billion cubic feet in the week ended July 30.
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NEW YORK (

TheStreet

) -- Natural gas futures gave back all of the previous session's gains and more on Thursday, the same day that the U.S. government said the weekly increase in natural gas storage wasn't as large as analysts had predicted.

Underground storage in the lower 48 states rose by 29 billion cubic feet for the week ending July 30, the Energy Information Administration said in a release Thursday. The net injection landed well below projections calling for a build-up of between 32 to 36 billion cubic feet. The forecast was provided by Platts, which polled a set of analysts.

The latest injection brings overall storage levels to 8.1% above the five-year average, but 4.3% below last year's volume, according to the report.

The September delivery natural gas contract on the Nymex, which gained 10 cents, or 2.1%, a day ahead of the report shed 14 cents, or 2.9%, to settle Thursday's session at roughly $4.60 per million British thermal units. The contract traded as high as $4.825 during the session and as low as $4.556 per million British thermal units.

Barclays Capital analyst Biliana Pehlivanova attributed the recent strength to uncharacteristically warm weather and said expectations going into the EIA's report were for an "unusually low injection, reflecting strong power generation demand."

The

United States Natural Gas Fund

(UNG) - Get Report

slipped 2.4% and the

First Trust ISE-Revere Natural Gas

(FCG) - Get Report

exchange-traded fund notched a 0.2% decline.

Meanwhile, the September crude oil contract also weakened during the session, losing 46 cents, or 0.6%, to settle at $82.01 a barrel. On Wednesday, the EIA reported a larger-than-expected drawdown of 2.8 million barrels in crude oil supplies, although gasoline and distillates stocks both rose to levels that exceeded weekly forecasts.

Also on the Nymex on Thursday, September heating oil lost 2 cents, or 0.7%, to settle at $2.19 a gallon and the September gasoline contract shed a penny, or 0.5%, to settle at $2.16 a gallon.

Energy-related equities had a mixed session although it was one of the session's strongest sectors.

Dow Jones Industrial Average

components closed on both sides of the flat line as

Exxon Mobil

(XOM) - Get Report

ticked 0.02% lower and

Chevron

(CVX) - Get Report

added 0.2%.

The NYSE Arca Oil index advanced 0.5% and the Philadelphia Oil Service Sector inched 0.2% higher.

Carrizo Oil & Gas

(CRZO) - Get Report

and

Plains Exploration & Production

(PXP)

both reported better-than-expected earnings. Shares closed ahead by 4.6% and 3.7%, respectively.

Shares of

BP

(BP) - Get Report

closed 3.3% higher as it aims to permanently plug its recently-stabilized well with cement. Meanwhile,

Transocean

(RIG) - Get Report

shares gained 8%. According to a

Reuters

report, the company said BP would bear the brunt of liabilities related to the Gulf of Mexico oil spill.

--Written by Melinda Peer in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.