Dow Jones Natural Gas - Morning Commentary

DJ Natural Gas Bounces as Weather Forecasts Grow Colder



  By Timothy Puko


  Natural gas prices are making small gains for a second-straight session as unusually cold weather covers the eastern
half of the U.S., raising the prospects for gas heating demand.

  Natural gas for February delivery is up 7.1 cents, or 2.7%, at $2.668 a million British thermal units on the New York
Mercantile Exchange.

  High temperatures are unlikely to rise above 30 degrees Fahrenheit--and in some places not even into the
teens--across the Northeast, Ohio Valley and Great Lakes regions, said according to Weather Services International in
Andover, Mass. These temperatures will be as much as 25-degrees-below normal and will be part of a series of Arctic
fronts that sends cold air across the East for a week, the forecaster said.

  "The latest forecasts are decidedly more bullish than any of the forecasts issued just last week," Dominick
Chirichella, analyst at the Energy Management Institute, said in a note.

  Half of U.S. homes use natural gas for heat, so the cold is raising expectations for demand. But the price spike is
limited because supplies grew to relatively healthy levels during a mild December and second-half of January, analysts
said. The cold would need to be much more severe and last much longer to make up for all that time of soft winter
demand, they said.

  "It's nothing crazy," said John Woods, president of JJ Woods Associates and a Nymex trader. "Still not enough to
sustain a rally."

  The lack of a strong rally may be a sign the market could have farther to fall as soon as the cold front dissipates,
analysts said. It is down more than 40% since its November peak. The muted reaction, the unusually light momentum for
this kind of cold spell, strongly suggest most traders believe the market is well supplied, Mr. Chirichella said.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.645/mmBtu, compared with Monday's
range of $2.50-$2.63. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $7.00-$13.00/mmBtu,
compared with Monday's range of $6.00 to $8.20.


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


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  (END) Dow Jones Newswires

  February 10, 2015 09:51 ET (14:51 GMT)

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021015 14:51 -- GMT
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