Dow Jones Natural Gas - End of Day Commentary

DJ Natural Gas Declines as Traders Look Past Summer Heat


   By Nicole Friedman


  NEW YORK--Natural gas prices fell to a two-and-a-half-month low Monday on expectations that cooler temperatures in
the fall would reduce demand for gas-powered electricity.

  Natural gas demand rises in hot weather, as consumers use electricity to power their air-conditioning units. Hot
weather this summer has kept the market relatively balanced, despite robust production. Natural gas consumption
typically declines in the fall, and demand for natural gas ebbs until winter, when households begin using the fuel to
heat their homes.

  Futures for September delivery settled down 2.6 cents, or 1%, to $2.65 a million British thermal units on the New
York Mercantile Exchange, the lowest settlement since June 5.

  Forecasts for the next two weeks show warmer temperatures than previously expected, with "widespread anomalous warmth
over the eastern two-thirds of the nation" in the next 11 to 15 days, according to forecaster WSI Corp.

  Even so, "it's not clear just how much demand September heat will bring," said energy-advisory firm Gelber &
Associates in a note. "Hotter-than-normal temperatures in September are not comparable to August heat waves."

  In response to the boom in U.S. natural-gas production in recent years, new export terminals are being built to ship
liquefied natural gas abroad. The first LNG export from the U.S. could come before the end of the year, said Bank of
America Merrill Lynch in a note, but export volumes might not grow as quickly as expected due to a global glut of LNG.
Given current LNG prices, U.S. natural gas would have to trade below $2/mmBtu to encourage European buyers to sign up
for long-term contracts and below $2.20/mmBtu to attract Asian buyers, the bank said.
        FUTURES          SETTLEMENT       NET CHANGE
    Nymex September        $2.650           -2.6c
    Nymex October          $2.656           -4.1c
    Nymex November         $2.740           -4.8c
       CASH HUB              RANGE               PREVIOUS SESSION
    El Paso Perm           $2.51-$2.61              $2.49-$2.55
    El Paso SJ             $2.51-$2.60              $2.50-$2.54
    Henry Hub              $2.62-$2.67              $2.69-$2.705
    Katy                   $2.665-$2.69             $2.665-$2.69
    SoCal                  $2.68-$2.80              $2.6525-$2.75
    Tex East M3            $1.29-$1.375             $1.28-$1.345
    Transco 65             $2.63-$2.69              $2.6825-$2.71
    Transco Z6             $2.47-$2.60              $2.75-$2.80
    Waha                   $2.58-$2.67              $2.58-$2.61

  Write to Nicole Friedman at nicole.friedman@wsj.com


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  (END) Dow Jones Newswires

  August 24, 2015 15:48 ET (19:48 GMT)

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

082415 19:48 -- GMT
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