DJ Natural Gas Gets Boost From Colder Weather Forecasts
By Timothy Puko
Natural gas prices are posting their largest gains in nearly two months as signs of cold and stronger heating demand
creep into forecasts, chasing many people who had bet against higher gas prices out of their positions.
Futures for January delivery recently traded up 14 cents, or 7.9%, to $1.907 per million British thermal units on the
New York Mercantile Exchange. That would be the second-largest percentage gain for any session since January, trailing
only the 11% gains on Oct. 29 that came primarily from a switch to December as the front-month contract.
Gas had been down 25% to start this month and, since August, money managers have had nearly two bearish positions on
gas for every one bullish position. A market leaning that heavily in any one direction is often vulnerable to snapping
back the other way if traders find a reason to close out positions and lock in profits on successful bets.
Monday-morning weather updates helped do that for gas, several people said. After weeks of unseasonably warm weather
nearly canceling the beginning of heating season, forecasts are starting to show temperatures closer to normal in the
East and below normal in the Rockies to end December.
Power prices are rising in the East and Mid-Atlantic states, and traders are questioning whether January will be as
warm and soft for heating demand as December, said Scott Shelton, broker at ICAP PLC. That is enough to have bearish
traders close out positions to cut their risk of prices surging as winter demand rises, he and others said.
"You don't want to be the guy that's left holding the bag," said John Woods, president of JJ Woods Associates and a
Nymex trader.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $1.77/mmBtu, compared with Friday's
range of $1.685-$1.75. Cash prices at the Transco Z6 hub in New York last traded at $1.60/mmBtu, compared with Friday's
range of $1.68 to $2.00.
Write to Timothy Puko at tim.puko@wsj.com
(END) Dow Jones Newswires
December 21, 2015 12:10 ET (17:10 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
122115 17:10 -- GMT
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