Dow Jones - Natural Gas Slips Further After Weekly Storage Data Nearly Matches Expectations

DJ Natural Gas Slips Further After Weekly Storage Data Nearly Matches Expectations

   By Timothy Puko


  Natural gas prices are ticking further down after federal data showed a weekly stockpile addition closely matching
expectations.

  The U.S. Energy Information Administration said storage levels grew by 111 billion cubic feet in the week ended June
5. That is 1 bcf less than the 112-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 lower supply or larger demand than expected, although the difference is likely too small
to be significant.

  The front-month July contract recently traded down 2.8 cents, or 1%, at $2.862 a million British thermal units on the
New York Mercantile Exchange. It had been even closer to unchanged ahead the update, and briefly moved to small gains
afterwards before retreating.

  "The market doesn't seem to be reacting very much," John Saucer, vice president of research and analysis at Mobius
Risk Group in Houston. "It certainly hasn't changed anything relative to what we've seen in the last few days."

  Prices are still up nearly 11% since they settled at a six-week low on Friday. Analysts think that bearish traders
have been exiting their bets--which helps to bid up prices--because of warm weather that suggests higher demand on the
way.

  The run has cooled a bit and prices have held close to unchanged today because of uncertainty around the balance of
supply and demand. The storage data suggests the market is well oversupplied, but other data suggests production is
plateauing after a long period of rampant growth.

  The 111-bcf addition brings storage levels to 2.3 trillion cubic feet, 47% more than a year ago and 1.9% above the
five-year average. EIA also said on Tuesday that production is likely to keep increasing and set a new monthly record
by July.

  But EIA also cut its output expectations in the same report for every quarter through 2016, and many analysts using
the same data believe it suggests production will actually start falling monthly in the second half of this year. That
has left some traders positioning themselves for a supply-demand dynamic that comes into balance, falling back from
severely oversupplied, later this year.

  "There's a lot of conflicting news right now," said Frank Clements, co-owner of Meridian Energy Brokers Inc. outside
New York. "People aren't quite sure."

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.85/mmBtu, compared with
Wednesday's range of $2.83-$2.94. Cash prices at the Transco Z6 hub in New York last traded at $2.92.5/mmBtu, compared
with Wednesday's range of $2.99 to $3.06.


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


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  (END) Dow Jones Newswires

  June 11, 2015 10:55 ET (14:55 GMT)

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

061115 14:55 -- GMT
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