DJ Natural Gas Keeps Rising on Profit Taking
By Timothy Puko
NEW YORK--Natural gas extended its rally to a third-straight session, likely from traders continuing to buy contracts
to cover their bets on falling prices, analysts and brokers said.
Natural gas for January delivery is up 0.1 cent, or 0.03%, at $3.707 a million British thermal units on the New York
Mercantile Exchange. The front-month contract has gained nearly 4% since it closed Monday near its lowest settlement of
the year.
Record production and mild December forecasts caused a near bear market in the last three weeks as traders have
expected supply to overwhelm demand for home heating. But hitting a yearly low in December is rare and prices are so
low they could start to draw more buyers from the power sector, analysts and brokers have said.
"I think it's a pause," said Anthony Lerner, senior vice president of industrial commodities at brokerage R.J.
O'Brien in New York.
Trading and volatility have shrank back a bit while traders prepare for the upcoming peak demand season. Half of all
U.S. homes use gas for home heating, making the winter weather a key driver in the market. Weather in the next four
weeks will be critical at both determining how much gas will be in storage and what direction traders take, Mr. Lerner
said.
Analysts and brokers estimate that 45 billion cubic feet drained from natural gas stockpiles last week, according to
the consensus average of 15 forecasts in The Wall Street Journal survey. The U.S. Energy Information Administration
will give its weekly update at 10:30 a.m. Thursday.
That drain would be about half of the drain from the same week a year ago. A long-lingering stockpile deficit would
narrow to 5.1% compared to storage levels at this time last year and 9.3% compared to the five-year average level.
With weather forecasts still unseasonably warm until Christmas, many don't believe the cold weather will come to
drive demand, Mr. Lerner and others said.
"The temperature forecasts still look bearish and that's the overriding concern," said Jim Ritterbusch, president of
energy-advisory firm Ritterbusch & Associates
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.65/mmBtu, compared with
Wednesday's range of $3.57-$3.65. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of
$4.00/mmBtu to $4.45/mmBtu, compared with Wednesday's range of $4.40 to $4.52.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
December 11, 2014 09:34 ET (14:34 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
121114 14:34 -- GMT
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