DJ Natural Gas Futures Surge on Cold Weather
By Christian Berthelsen
Natural gas prices on Monday soared to their biggest one-day gain in nearly nine months, as traders and investors
braced for below-normal temperatures that are expected to stoke demand for the heating fuel.
The arrival of frigid weather early in the season is reviving concerns that another brutal winter could strain the
nation's natural-gas supplies. Last year's severe cold led to record gas consumption by businesses, households and
utilities and a sharp runup in prices.
Over the weekend, several weather forecasters revised downward their projections for temperatures in the eastern U.S.
during the Thanksgiving holiday weekend. That has spurred analysts and traders to draw comparisons with last winter,
which also ended up being unexpectedly cold and a drag on economic growth generally.
Natural gas for December delivery jumped 8% to $4.341 a million British thermal units on the New York Mercantile
Exchange. That's the largest one-day dollar and percentage gain since Feb. 19, when gas prices hit their high for the
year amid rapidly dwindling supplies.
"This is the most volatile start of the season we've ever experienced," said Teri Viswanath, a gas market strategist
at BNP Paribas in New York. "We still have this market memory of what happened last winter."
Traders have sent gas futures on big swings in recent weeks amid a debate over the weather and the ability of natural
gas producers to meet the needs of residential and industrial consumers in the event of a prolonged cold spell.
Gas prices are up 9.2% in the last two trading sessions after posting losses of that size in the previous four.
Monday's closing price is the highest in a little over a week, but it is 29% below the Feb. 19 level.
"This move looks impulsive," analysts at Houston research consultancy Gelber & Associates wrote in a note to clients.
"There is enough production to handle this colder-than-normal winter." But the analysts noted that if low temperatures
again forced companies to scale back output - a situation that occurred last winter - price spikes would result.
After the mass of frigid air over the Midwest and the Northeast dissipates at the end of this week, the U.S. is
expected to get a brief respite ahead of Thanksgiving, which falls on Nov. 27. After that, another bout of bitter cold
is forecast to descend on the eastern half of the country.
U.S. natural gas stockpiles have risen sharply during the summer and fall. Last week, the amount of gas in storage
grew for the 32nd consecutive week, and the volumes added were more than market participants expected.
Some analysts estimate that this week's Energy Information Administration reading on stockpiles, due Thursday morning
and covering the week ended Nov. 14, will show the first decline of the season.
Total natural gas inventories stood at 3.6 trillion cubic feet after last week's storage increase, a level analysts
say will be adequate for even a severe winter. Still, inventories remain 6.2% below average levels for this time of
year.
FUTURES SETTLEMENT NET CHANGE
Nymex December $4.341 +32.1c
Nymex January $4.444 +31.5c
Nymex February $4.396 +29.3c
CASH HUB RANGE PREVIOUS DAY
El Paso Perm $4.24-$4.35 $4.0175-$4.13
El Paso SJ $4.26-$4.35 $4.045-4.10
Henry Hub $4.19-$4.30 $4.00-$4.08
Katy $4.20-$4.26 $3.92-$4.03
SoCal $4.38-$4.50 $4.20-$4.35
Tex East M3 $4.22-$5.00 $3.44-$4.72
Transco 65 $4.25-$4.275 $4.03-$4.08
Transco Z6 $7.40-$10.15 $3.50-$4.00
Waha $4.27-$4.32 $3.99-$4.06
Write to Christian Berthelsen at christian.berthelsen@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
November 17, 2014 16:54 ET (21:54 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
111714 21:54 -- GMT
------
No comments:
Post a Comment