By Timothy Puko
NEW YORK--Natural-gas prices closed at a new four-month high Thursday as an early burst of winter cold drains
stockpiles for the first time this season.
The Arctic chill that descended for about a week has exposed lingering fears about the potential for gas to
skyrocket. Prices shot past $6 a million British thermal units during last winter's historic cold, and some traders
don't want to be left out if November's weather is a sign of things to come.
About half of all U.S. homes rely on natural gas for heat, and cold weather spurs demand. November is likely to be a
historic month for that weather-related consumption, according to MDA Weather Services. The country is on pace to have
more days cold enough to require heating than any other November since at least 2000, MDA said.
Investors are also concerned about cold-related production cuts that can further tighten the market. So-called
"freeze offs" that can limit work at drill sites and outages at several eastern processing plants have been a hot topic
of conversation, said Mike Tran, analyst at CIBC World Markets Inc.
It likely helped the supply-demand balance to be tighter than expected last week, he said in a note. The U.S.
Information Administration said Thursday that stockpiles shrank by 17 billion cubic feet for the week that ended Nov.
14, compared with the 11-bcf withdrawal expected by analysts and brokers.
Prices rose after the news and finished with another day of sizeable gains in a month filled with them. The
front-month December contract settled up 11.8 cents, or 2.7%, at $4.489/mmBtu on the New York Mercantile Exchange. That
was the highest closing price since June 25, breaking a four-month high set just two weeks ago. Prices are up nearly
13% in a week.
BP Capital, which has a bearish view on natural-gas prices into next year, has moved in to short-term bullish
positions to account for the weather, said portfolio manager Brian Bradshaw. Weather can move the market so
dramatically that you have to account for it, he added.
The Dallas-based fund has a total of $1 billion in assets under management, including $300 million in commodity
funds. Mr. Bradshaw declined to say specifically how much he has moved into bullish natural-gas positions.
"Everyone thinks it's not possible" to have another winter like last year, Mr. Bradshaw said. "But the weather does
impossible things all the time."
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
November 20, 2014 15:09 ET (20:09 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
112014 20:09 -- GMT
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