DJ Natural Gas Rises Ahead of Stockpile Update
By Timothy Puko
Natural gas is rising for the first time in seven sessions, likely from traders closing out bearish bets to position
themselves ahead of a key weekly update on stockpiles.
Futures for January delivery recently traded up 3.5 cents, or 2%, at $1.825 a million British thermal units on the
New York Mercantile Exchange. Despite the gains, prices are still hovering around their all-time, inflation-adjusted
Nymex lows after dropping 25% in just one month of trading.
Warm weather in the U.S. caused by the El Nino weather phenomenon has sharply limited demand for the heating fuel
this year just as rampant production had pushed stockpiles to an all-time high. Storage levels likely shrank by just 41
billion cubic feet last week, according to the average forecast of 17 analysts, brokers and traders surveyed by The
Wall Street Journal. That is only a third of their five-year average drawdown for the week.
The U.S. Energy Information Administration scheduled its weekly update on storage levels for 10:30 a.m. ET. It is a
widely watched indicator of supply and demand and trading often calms and reverses recent trends as traders close
positions and adjust their strategies in the hours before the data release.
Prices have traded within just a 6.2-cent range during Thursday's session so far. If the gains hold, they would stop
a losing streak at six-sessions, but several analysts said they are likely temporary. Bearish trades have far
outnumbered bullish trades in recent weeks, and to close out those bearish positions to take profits, bearish traders
will have to buy back in, a trend that can cause prices to rise even when few in the market think they should.
"The weather is not getting colder," said Scott LaShelle, executive vice president of gas operations for Great
Eastern Energy, a retail supplier. "This is just people taking some risk off the table."
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $1.74/mmBtu, compared with
Wednesday's range of $1.625-$1.72. Cash prices at the Transco Z6 hub in New York last traded at $1.75/mmBtu, compared
with Wednesday's range of $1.445 to $1.55.
Write to Timothy Puko at tim.puko@wsj.com
(END) Dow Jones Newswires
December 17, 2015 10:15 ET (15:15 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
121715 15:15 -- GMT
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