natural gas

natural gas

Monday, February 9, 2015

Dow Jones Natural Gas - End of Day Commentary

DJ Natural Gas Breaks Three-Session Losing Streak as Weather Forecasts Get Frigid

   By Timothy Puko


  Natural gas prices closed slightly higher Monday, rebounding from last week's 2 1/2 year low after weather forecasts
raised expectations for heating demands by showing severe cold and snow spreading over the east.

  The front-month March contract settled up 1.8 cents, or 0.7%, at $2.597 a million British thermal units on the New
York Mercantile Exchange. Gains had been as high as 3% immediately after electronic trading opened Sunday evening, but
the contract retreated back to unchanged in the morning.

  Forecasts flipped temperatures from above-normal to below-normal for large portions of the Midwest and Southeast this
week. At least two shots of arctic air are also headed into the Northeast through the middle of the next week, private
forecasters said. The cold temperatures are likely to drive a high amount of heating demand with some of the most
severe weather focused on New York and Boston, according to Weather Services International in Andover, Mass.

  Gains weren't stronger, however, because the market is still oversupplied, analysts and a trader said. This cold
spell is likely coming too late in the winter to significantly absorb the supply and reverse a market that has been
bear since November, they said.

  "The market is sitting back and looking at the weather with a bit of a yawn right now," said Dominick Chirichella,
analyst at the Energy Management Institute.

  Money managers probably took advantage of Sunday evening's boost to make another bearish bet, leading to the retreat
and soft gains, said Scott Gettleman, an independent trader in New York. Record production for 11-straight months to
end 2014 drove money managers to bet against natural gas. Hedge funds, pension funds and others increased their
net-bearish position last week to 68,764--from 54,143 week before--the most bearish position since the week that ended
Nov. 19, 2013, Friday's new CFTC data showed.

  Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, advised clients to target the price
spike as a new chance to enter bearish trades. The cold shot could push prices above $2.70/mmBtu, and then traders can
expect a decline to around $2.50/mmBtu, he said.

  "The market will still need to price in an expected record pace of production," he said.


  Write to Timothy Puko at tim.puko@wsj.com


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  (END) Dow Jones Newswires

  February 09, 2015 14:55 ET (19:55 GMT)

  Copyright (c) 2015 Dow Jones & Company, Inc.

020915 19:55 -- GMT
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