DJ Natural Gas Retreats on Uncertain Demand
By Timothy Puko
Natural gas fell Wednesday, retreating from its highest intraday price in nearly a month as many traders questioned
recent assumptions about strong demand.
A tropical storm that hit Texas and hot forecasts for other parts of the country have helped push up prices several
times this week on expectations the weather could interrupt supply and create strong demand for gas-fired power. But
many traders also question those assumptions and have pushed back on rising prices several times.
Prices for the front-month July flipped from gains to losses and settled down 3.9 cents, or 1.4%, to $2.855 a million
British thermal units on the New York Mercantile Exchange. Prices had surged in the morning to as high as $2.955/mmBtu,
their highest intraday point since May 22, and then began a midday retreat for the second session in a row.
"We're having these intraday reversals largely because the market is uncertain," said Teri Viswanath, a natural-gas
strategist at BNP Paribas SA in New York. "Most of the market is aware that the threat of hurricanes is simply not what
it used to be."
Ms. Viswanath and others say Tropical Storm Bill, which was downgraded to a depression and is causing flood watches
and warnings across East Texas, is actually likely to suppress demand. The region including Texas, Oklahoma, Arkansas
and Louisiana is one of the few areas left where power plants can make a big switch to use gas instead of coal, making
the region the market's key consumer, according to BNP. And the repeated rains in the region are keeping temperatures
too low to ramp up demand for air conditioning and gas-fired power, Ms. Viswanath said.
That could lead to several weeks of large surpluses, she added. Last week's addition to storage was likely about a 7%
larger than the five-year average, according to 16 forecasters surveyed Wednesday by The Wall Street Journal. Their
average forecast is for a 93-billion-cubic-feet addition to stockpiles for the week ended June 12. EIA releases its
weekly storage updates on Thursday at 10:30 a.m. EDT.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
June 17, 2015 15:01 ET (19:01 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
061715 19:01 -- GMT
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