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Thursday, September 18, 2014

Dow Jones - End of Day Natural Gas Commentary

DJ Natural-Gas Prices Fall on Larger-than-Expected Surplus

  By Timothy Puko

  NEW YORK--Natural-gas futures closed lower Thursday after a weekly stockpile update showed a larger-than-expected
surplus.

  Prices for the front-month October contract settled down 10.3 cents, or 2.6%, at $3.91 a million British thermal
units on the New York Mercantile Exchange. The retreat put natural gas back in the middle of a 32-cent range it has
traded in for nearly all of the past two months.

  Producers added 90 billion cubic feet of gas to storage for the week ended Sept. 12, the U.S. Energy Information
Administration said. The addition was larger than the 89 bcf consensus average expectations of analysts and brokers in
The Wall Street Journal survey.

  Traders use the EIA update to gauge how quickly stockpiles are recovering from high demand that drained them to
11-year lows this winter. Last week's addition refilled stockpiles to 2.9 trillion cubic feet, about 13% below the
five-year average level for that week of the year. It had been at less than half of the average at the start of spring.

  The refill is at a record pace and has pressured gas prices all summer. Thursday's drop is the fourth time since
August that gas has retreated within two days of cresting $4/mmBtu.

  "Every little weakness they look to sell," said Scott Gettleman, an independent trader in New York.

  Mr. Gettleman is one of many traders who have expected prices to rise. Traders are used to annual rallies as the
winter demand season for home heating approaches.

  But they will have to contend with a steady stream of stockpile additions likely to be just as large in the coming
weeks as they were last week, said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates. The
surge in domestic gas production has helped oversupply the market by about 3 bcf a day, according to analysts'
estimates.

  Thursday shows how those opposing forces will help make the market difficult to read this fall, Mr. Ritterbusch said.
The storage update was only 1 bcf off of the consensus but that surplus triggered enough selling to cancel out more
than half of a four-day rally.

  "That tells me a lot of people were waiting to pounce on a strong number even if it was only 1 or 2 bcf off," Mr.
Ritterbusch said. "Things did get a little overheated earlier in the week."

  FUTURES SETTLEMENT NET CHANGE

   Nymex October $3.91 -10.3c

   Nymex November $3.975 -10.2c

   Nymex December $4.057 -10.6c

   CASH HUB RANGE PREVIOUS DAY

   El Paso Perm $3.90-$3.9575 $3.875-$3.985

   El Paso SJ $3.92-$3.9675 $3.970-$3.995

   Henry Hub $3.94-$3.995 $3.935-$4.000

   Katy $3.9625-$4.03 $3.95-$4.08

   SoCal $4.14-$4.35 $4.1900-$4.3975

   Tex East M3 $1.85-$2.25 $2.395-$2.520

   Transco 65 $3.87-$3.995 $3.96-$4.05

   Transco Z6 $2.00-$2.35 $2.42-$2.52

   Waha $3.94-$3.96 $3.985-$4.000

  Write to Timothy Puko at

  Timothy.Puko@wsj.com

  -30-

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  (MORE TO FOLLOW) Dow Jones Newswires

  September 18, 2014 15:12 ET (19:12 GMT)

  Copyright (c) 2014 Dow Jones & Company, Inc.

091814 19:12 -- GMT
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