DJ Natural Gas Plunges After Inventory Report
By Carolyn Cui
Natural-gas futures extended losses Thursday after a government report showed a smaller-than-expected withdrawal last
week, fueling fears over the high-levels of gas storage.
Futures for February delivery, which were 3% lower ahead of the report, took another plunge to $2.177 a million
British thrermal units, down 4%, on the New York Mercantile Exchange.
The U.S. Energy Information Administration said that stockpiles fell 168 billion cubic feet in the week ended Jan. 8,
a smaller withdrawal than the 175 billion that was expected among analysts and traders surveyed by The Wall Street
Journal.
Mild temperatures in late 2015 kept demand for natural gas subdued, weighing on prices and pushing inventories well
above the average levels. Cold weather boosts demand for natural gas, which is used as the primary heating fuel in half
of the U.S. households.
"The 168 (billion cubic feet) in net withdrawals was... a minor bearish surprise that suggests at least a modest
weakening of the background supply/demand balance," wrote Tim Evans, an energy futures specialist at Citigroup, in a
note to clients. "This will increase market confidence that it can ignore the prospect of higher withdrawals expected
for this week and next, jumping to conclusion that winter may as well be over."
The withdrawal was below the 178 billion five-year average, and much less than the 220 billion reported at this time
last year, according to EIA data.
The natural gas market is expected to remain oversupplied through the rest of the winter. Total inventories as of
Jan. 8 totaled 3.475 trillion cubic feet, 20.3% above levels from a year ago and 15.8% above the five-year average for
the same week, according to EIA.
Write to Carolyn Cui at carolyn.cui@wsj.com
(END) Dow Jones Newswires
January 14, 2016 11:54 ET (16:54 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
011416 16:54 -- GMT
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