Energy Omission Sparks Rally in Natural Gas

The U.S. Energy Department said Friday that it overlooked a change in natural gas inventory statistics, triggering the biggest swing in natural gas prices in three months.

After discovering the omission, the department waited a week to inform energy companies, traders, other government agencies and the public because of a policy of releasing gas-supply data only on Thursday mornings, said Bill Trapmann, the senior gas analyst whose team compiles the information.

The department disclosed the reclassification Thursday. The change signaled that utilities haven’t been adding gas to storage as quickly as was suggested previously, sparking a rally in natural gas prices.

July gas futures plunged 9.8% on the New York Mercantile Exchange eight days ago, when the Energy Department said inventories had soared a record 125 billion cubic feet the previous week.

Gas futures jumped 6.5% Thursday when the agency explained that the previous week’s report had included the so-called base gas, or supplies held in permanent storage to maintain reservoir pressure, that was redefined as available fuel.

Utilities, industrial fuel buyers, traders and economists rely on the Energy Department’s weekly gas inventory report to gauge demand and the industry’s ability to supply furnaces, power plants and factories.

From Bloomberg News