DJ Natural Gas Prices Bounce Off Low on Weather Forecasts
By Christian Berthelsen
Natural gas futures rose Wednesday from a nearly one-month low set the day before as weather forecasts indicated
temperatures could be slightly higher than previously expected, potentially raising demand for gas-fired electricity to
power air conditioning.
The front-month August natural gas contract was up 1.5 cents, or 0.5%, at $2.7310 a million British thermal units on
the New York Mercantile Exchange. The market has been largely range-bound between $2.50 and $3 since late January and
traded in an even tighter range throughout most of June. Prices settled Tuesday at their lowest level since June 8.
Overall, U.S. weather forecasts are largely temperate, with normal conditions expected over much of the U.S. in the
coming days. But Commodity Weather Group said key markets in the Midwest and the eastern seaboard could see a slight
bump in temperatures through mid-July.
Analysts and traders remain bearish on the market overall, with U.S. output at nearly record highs and potentially
increasing once companies wind up maintenance on production infrastructure. Bearish bets by money managers such as
hedge funds and other financial investors in the market outnumber bullish ones by nearly two to one.
"Output appears capable of challenging record levels within the next couple [of] weeks, a development that should
force further expansion in the supply surplus," research consultancy Ritterbusch and Associates said in a note.
"Production strength could prove to be a sleeper in forcing values a bit lower than we anticipate."
The U.S. has now fully recovered from the severe drawdown in gas stockpiles brought on by the winter of 2013-2014.
Current inventories of 2.6 trillion cubic feet are just above average levels for this time of year. That number could
rise sharply as production remains robust and demand remains mild so far this summer, analysts said. Weekly additions
to stored supplies have been running much higher than average, said analyst Dominick Chirichella of the Energy
Management Institute.
In markets for physical gas, cash prices for next-day delivery of gas at the benchmark Henry Hub in Louisiana last
traded at $2.6825, compared with Tuesday's range of $2.68-$2.765 a million BTUs. Cash prices at the Transco Z6 hub in
New York last traded at $2.90, compared with Tuesday's range of $2.35-$2.91 a million BTUs.
Write to Christian Berthelsen at Christian.Berthelsen@wsj.com
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(END) Dow Jones Newswires
July 08, 2015 09:53 ET (13:53 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
070815 13:53 -- GMT
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