DJ Natural Gas Sinks to Lowest Level Since 2002
By Nicole Friedman And Timothy Puko
Natural gas prices plunged to a 14-year low Monday, as an unusually warm winter saps demand and deals another blow to
struggling energy companies.
Recent high temperatures for this time of year in cities from Michigan to Wisconsin and New York have slashed
consumption of natural gas, which is the primary heating fuel in about half of U.S. households.
The unseasonably warm weather comes at an inopportune time for the gas market, which already is grappling with a
large surplus of the fuel thanks to years of rising North American production.
Weather forecasters say the worst for the natural-gas market isn't over yet. The latest predictions call for
"significantly warmer" weather in the next two weeks than was previously expected, according to Commodity Weather Group
LLC. CWG says this year is on pace to mark the warmest start to winter on record.
"If this ultra-warm trend continues, the potential impact on natural gas could be severe. To balance the market,
steep further price declines may be required," Andy Weissman, chief executive of EBW AnalyticsGroup, wrote in a note.
"During the past two weeks, forecasts for December shifted strongly warmer nearly every day, cutting expected December
demand sharply."
Natural gas futures settled down 9.6 cents, or 4.8%, at $1.894 a million British thermal units, the lowest settlement
since September 2001.
The selloff pummeled shares of natural-gas producers even as the broader S&P 500 Energy index rose together with the
price of crude oil. Ultra Petroleum Corp. was down 17%, Southwestern Energy Co. slumped 10% and Range Resources Corp.
fell 3.7%.
Bond prices of some energy producers also weakened.
Companies with high debt loads have been hit especially hard in recent months amid growing doubts about their ability
to pay lenders and bondholders while energy prices are in a free fall.
Moderate temperatures and robust production have pushed the natural-gas market into oversupply this year. Inventories
as of Dec. 4 stood 6.5% above the five-year average for this time of year, according to the Energy Information
Administration, sparking concerns that storage facilities could run out of room to hold the fuel by mid-2016.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded between $1.75 and $1.80/mmBtu, compared
with Friday's range of $1.73-$1.795.
Cash prices at the Transco Z6 hub in New York last traded between $1 and $1.70/mmBtu, compared with Friday's range of
82 cents to $1.
FUTURES SETTLEMENT NET CHANGE
Nymex January $1.894 -9.6c
Nymex February $1.959 -9.1c
Nymex March $2.018 -8.9c
CASH HUB RANGE PREVIOUS SESSION
El Paso Perm $1.67-$1.82 $1.655-$1.76
El Paso SJ $1.7525-$1.825 $1.70-$1.77
Henry Hub $1.64-$1.745 $1.73-$1.795
Katy $1.67-$1.72 $1.73-$1.80
SoCal $1.80-$2.25 $1.78-$2.00
Tex East M3 $1.11-$1.20 $0.66-$0.92
Transco 65 $1.64-$1.70 $1.65-$1.72
Transco Z6 $1.35-$1.45 $0.82-$1.00
Waha $1.65-$1.76 $1.68-$1.72
Write to Nicole Friedman at nicole.friedman@wsj.com and Timothy Puko at tim.puko@wsj.com
(END) Dow Jones Newswires
December 14, 2015 15:16 ET (20:16 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
121415 20:16 -- GMT
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