Dow Jones Natural Gas - Post-EIA Report Commentary

DJ Natural Gas Sells Off Sharply as Supply Growth Surges



  By Christian Berthelsen


  Natural gas futures sold off sharply Thursday after U.S. stockpiles grew more than expected.

  The market was already trading lower as heat wave forecasts faded and expectations for gas-fired cooling demand
weakened. But the losses deepened after the U.S. Energy Information Administration reported gas stockpiles grew by 112
billion cubic feet in the week ended May 22, compared with the 99 bcf increase projected by analysts surveyed by The
Wall Street Journal.

  Natural gas for the new front-month July contract recently traded down 13.5 cents, or 4.6%, at $2.7130 a million
British thermal units on the New York Mercantile Exchange, on track for their fourth straight losing session. Futures
have lost more than 10% since their recent peak in the middle of May, as robust gas production continues to replenish
inventories in spite of early season above-normal temperatures that have driven demand.

  Total U.S. gas inventories now stand at 2.1 trillion cubic feet, less than 1% below average for this time of year.
That means the U.S. has almost finally recovered from the sharp supply drawdown brought on by heating demand during the
2013-14 winter.

  "Production is still really strong," said Gene McGillian, senior analyst at futures brokerage Tradition Energy in
Stamford, Conn. "People are starting to focus again on the fact that production is expected to climb back to record
levels, while we have mild seasonal demand."

  Forecaster Commodity Weather Group predicted "another slight drop-off in forecast demand over the next two weeks," as
a Northeastern heat wave eased in the coming days and the outlook for continued above-normal temperatures in the region
into mid-June appeared less likely.


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


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  (END) Dow Jones Newswires

  May 28, 2015 11:06 ET (15:06 GMT)

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052815 15:06 -- GMT
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