natural gas

natural gas

Monday, March 23, 2015

Dow Jones Natural Gas - Morning Commentary

DJ Natural Gas Slides as Forecasts Turn More Temperate



  By Christian Berthelsen


  Natural gas futures slid Monday as forecasts for below-normal temperatures over the Northeast faded in the coming
weeks, dashing expectations for a final bout of late-season heating demand.

  Natural gas for April delivery was down 9.1 cents, or 2.9%, at $2.7050 a million British thermal units on the New
York Mercantile Exchange, on pace for a third-consecutive session of declines.

  Revisions to weather forecasts over the weekend grew more variable in keeping with the transition from winter to
spring, as what was expected to be a strong bout of much-below normal temperatures over a large swath of the Northeast
during the last days of March and the beginning of April turned more seasonal.

  "As the calendar rolls into the middle of the transitional springtime season, the weather models and the patterns
themselves can be more difficult to nail down, especially in terms of establishing stability," Commodity Weather Group
said in a note.

  While prices have recovered from 52-week lows hit last month, the market remains mired in surging production and
tapering demand with the end of winter heating season. Natural gas is used to heat more than half the homes in the
U.S., according to the Energy Information Administration.

  "Unrelenting supply growth has returned natural-gas prices to five-year lows despite a colder-than-normal end to
winter," Morgan Stanley said in a note. "There are risks that prices see further downward pressure this spring as
heating demand dissipates and inventories show large year-over-year surpluses."

  Indeed, the most recent weekly inventory data released by the EIA showed inventories are 53% higher than year-ago
levels that were depleted by last year's severe winter, and 13% below average for this time of year.

  Money managers such as hedge funds and other financial investors in the market are largely bearish, with the number
of bets that prices will fall outnumbering bets that they will rise, according to data released Friday by the U.S.
Commodity Futures Trading Commission.

  In the physical market, cash prices for next-day delivery of gas at the benchmark Henry Hub in Louisiana last traded
at $2.67 a million Btus, below Friday's range of $2.7925-$2.86. Prices for physical gas at the Transco Z6 hub in New
York traded in a bid-offer range of $2.20-$3.00, compared with Friday's range of $2.85-$2.91.


  Write to Christian Berthelsen at christian.berthelsen@wsj.com


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  (END) Dow Jones Newswires

  March 23, 2015 09:18 ET (13:18 GMT)

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

032315 13:18 -- GMT
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