Dow Jones Natural Gas - End of Day Commentary

DJ Natural-Gas Prices Fall After Inventory Report



  By Timothy Puko


  Natural-gas prices fell Thursday as an update to stockpiles and technical traders brought bearish sentiment into the
market.

  Prices for the front-month June contract settled down 4.2 cents, or 1.5%, to $2.734 a million British thermal units
on the New York Mercantile Exchange. It was the biggest loss for gas in nearly two weeks.

  The U.S. Energy Information Administration said storage levels grew by 76 billion cubic feet in the week ended May 1.
That is 1 bcf more than the 75-bcf average of forecasters surveyed by The Wall Street Journal.

  The EIA update is widely considered one of the best measures of supply and demand for the natural-gas market. This
draw would indicate slightly larger supply or smaller demand than expected, although the difference is likely too small
to be significant.

  "The only thing fundamental is that they're going to be pumping a ton of gas into every pipeline they can get. And
that's not going to change," said Michael Doyle, a broker at Eclipse International Inc. in New York.

  Natural gas fell from gains of 1.7% starting around 10 a.m. EDT and accelerating after the data's release despite
such a small miss. That is likely a sign that technical traders were the primary driver in the market Thursday, brokers
said.

  Gas had gained momentum by surpassing its 50-day moving average and approaching its 100-day moving average, said
Martin King, vice president of institutional research at FirstEnergy Capital Corp. in Calgary. But prices hit a ceiling
just above $2.80/mmBtu for the fourth straight session, and the repeated failure to break through to a new seven-week
high encouraged technical traders to sell, said Peter Donovan, broker for Liquidity Energy in New York.

  "You knock on the door three times and nobody answers, then you go away," Mr. Donovan said.

  Last week's addition brought storage levels to 1.8 trillion cubic feet, 71% more than a year ago and 3.6% below the
five-year average.


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


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  (END) Dow Jones Newswires

  May 07, 2015 15:17 ET (19:17 GMT)

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050715 19:17 -- GMT
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