DJ Natural Gas Futures Slide as May Forecasts Warm Up
By Christian Berthelsen
Natural gas futures slid on Monday as weather forecasts showed a warming pattern over much of the central U.S. two
weeks from now, potentially sapping the last dregs of gas-fired heating demand for the season.
The front-month May gas contract was down 7.6 cents, or 2.9%, at $2.5580 a million British thermal units on the New
York Mercantile Exchange.
Forecasts are calling for a chill to set in over much of the Midwest and Northeast through the end of April, which
could provide a mild boost to demand for gas to heat homes. But in the first days of May, a swath of above-normal
temperatures over the Midwest is gaining strength.
The warmer weather comes at a time when the U.S. is producing massive supplies of natural gas. Financial speculators
such as hedge funds and other money managers are strongly bearish on the market, with bets that prices will fall
reaching a three-year high as of Friday, according to data from the U.S. Commodity Futures Trading Commission.
Thanks to continued robust production from domestic shale fields, natural gas supplies have been growing rapidly.
U.S. stockpiles last week rose 63 billion cubic feet to a total 1.5 trillion cubic feet, 82% above year-ago levels and
just 8.6% below the five-year average.
With cold temperatures fading and gas-fired heating demand set to decline, those balances are only poised to grow. A
research note from Morgan Stanley said the gap between supply and demand is widening at a rate of 3 billion cubic feet
per day.
"Unrelenting supply growth has returned natural gas prices to five-year lows despite a colder-than-normal end to
winter," the New York bank said. "There are risks that prices see further downward pressure this spring as heating
demand dissipates and inventories show large year-over-year surpluses."
In the physical market, cash prices for next-day delivery of natural gas at the benchmark Henry Hub in Louisiana last
traded at 2.56 a million Btus, down from Friday's range of $2.62-$2.645. At the Transco Z6 hub in New York, natural gas
last traded at $2.20 a million Btus, up from Friday's range of $1.65-$1.80.
Write to Christian Berthelsen at christian.berthelsen@wsj.com
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(END) Dow Jones Newswires
April 20, 2015 10:31 ET (14:31 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
042015 14:31 -- GMT
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