DJ Natural Gas Prices Mark Biggest Gains in Nearly Two Weeks
By Timothy Puko
Natural gas prices made their biggest gains in nearly two weeks, as strong winter demand and dwindling stockpiles
boosted prices.
Natural gas for April delivery settled up 5.7 cents, or 2.1%, at $2.769 a million British thermal units on the New
York Mercantile Exchange. It's the largest percentage gain and first back-to-back winning sessions since Feb. 20.
Cold has been so severe that a rush of late-season heating demand likely drained 225 billion cubic feet out of
storage last week, according to The Wall Street Journal survey of 15 analysts. That would be double the average drain
for that week of the year, according to data from the U.S. Energy Information Administration.
The agency plans to release its official data on storage levels on Thursday at 10:30 a.m. Last week's 219-bcf drain
set a new high for a week in the second half of February.
"This will offer pops to the marketplace, the consecutive big withdrawals from storage," said Dean Hazelcorn, trader
at the brokerage Coquest Inc. in Dallas. "It needs to come and come and be relentless."
Storage reports are likely to show strong withdrawals for at least two more weeks. About half of U.S. homes use
natural gas for heat, making cold weather one of the biggest drivers for demand.
Cities including Denver, Chicago and Philadelphia are likely to see lows in the single digits this week, according to
MDA Weather Services in Maryland. Large parts of the country will see daily average temperatures of more than
20-degrees-Fahrenheit-below normal for early March.
"I don't think anyone anticipated this kind of weather for the beginning of March," said John Woods, president of JJ
Woods Associates and a Nymex trader.
Prices could rise to as high as $3/mmBtu, but traders are also likely to sell off at the first sign the market could
resume the collapse it started late last year, Mr. Hazelcorn said. A string of record production numbers has many
fearing that once winter ends, surpluses will be so high that storage might near capacity, crushing prices, later this
year.
Some bankers are starting to advise against that. The late surge in winter heating demand is draining stockpiles at a
similar pace as last year's historically cold winter, said Teri Viswanath, a natural-gas strategist at BNP Paribas SA
in New York. BNP has joined several banks in lowering its forecast for the amount of gas in storage at the end of the
winter. It expects that number to be less than 1.5 trillion cubic feet, down from earlier expectations of 1.7 tcf. That
should quell any concerns that storage could fill up and collapse prices later this year, Ms. Viswanath said in a note.
-Write to Timothy Puko at timothy.puko@wsj.com
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(END) Dow Jones Newswires
March 04, 2015 15:21 ET (20:21 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
030415 20:21 -- GMT
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