DJ Natural Gas Touches New One-Month Low on Soft Demand
By Timothy Puko
NEW YORK--Natural-gas prices touched a new one-month intraday low Wednesday morning, falling below $3.80 for the
first time since September as comfortable weather and soft demand continue to encourage selling.
Natural gas for November delivery fell 5.1 cents, or 1.3%, at $3.765 a million British thermal units on the New York
Mercantile Exchange. Prices started to fall after the trading floor opened at 9 a.m., undoing small gains from
off-hours trading that analysts attributed to short covering.
This is the second straight sessions of losses as warm weather forecasts make for a grim demand outlook. Temperatures
as much as 15 degrees Fahrenheit above normal will cover large parts of the country, especially the Rockies, through
the end of the month, according to MDA Weather Services. Without any cold to push demand for home heating, prices
shouldn't push past $4/mmBtu, according to energy-consulting firm Gelber & Associates in Houston.
"Mild weather that isn't going to generate any seasonal demand has the market under pressure again," said Gene
McGillian, a broker and analyst at Tradition Energy. "I'm a little surprised we haven't dropped down to our summer lows
yet, but I think it's coming."
Natural gas is now at its lowest point since Sept. 8, when it dipped to $3.761/mmBtu. With demand tepid, supplies
have started to build up in storage. Though stockpiles started this spring at less than half of their five-year
average, they're on pace to be just 8.7% below normal by Nov. 1, said Tancred Lidderdale, senior economist at the U.S.
Energy Information Administration.
Mild weather, new pipelines and strong production are likely to keep those storage additions coming past Nov. 1, too,
the traditional beginning of heating season, analysts said. Morgan Stanley warned clients Monday that prices could
slide because the market hasn't priced-in that possibility. Going into December, storage levels will likely surpass
their 10-year norms, putting pressure on 2015 prices to fall below their current $3.85/mmBtu strip, energy investment
bank Tudor, Pickering, Holt & Co. said Friday.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.78/mmBtu, compared with Tuesday's
range of $3.86-$3.935. Cash prices at the Transco Z6 hub in New York last traded at $2.075/mmBtu, compared with
Tuesday's range of $2.10 to $2.18.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
October 15, 2014 09:50 ET (13:50 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
101514 13:50 -- GMT
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