Dow Jones - Natural Gas Prices Surge On Larger-Than-Expected Inventory Draw

DJ Natural Gas Prices Surge on Larger-Than-Expected Inventory Draw


 By Nicole Friedman


  NEW YORK--Natural-gas futures soared Thursday after weekly inventory data showed that stockpiles fell more than
expected last week.

  Natural-gas inventories shrank by 117 billion cubic feet in the week ended Jan. 1, the U.S. Energy Information
Administration said Thursday. Analysts and traders surveyed by The Wall Street Journal had expected the agency to
report a 100-bcf withdrawal.

  Futures for February delivery settled up 11.5 cents, or 5.1%, to $2.382 a million British thermal unit on the New
York Mercantile Exchange, on track for the highest settlement since November.

  Inventories remain 15% above five-year average levels for this time of year.

  Moderate weather-driven demand and robust production has pushed the natural-gas market into oversupply in recent
months. Stockpiles usually start drawing in early winter as more consumers use natural gas for indoor heating, but mild
temperatures this winter meant that inventories kept growing until late November.

  However, frigid temperatures appeared across much of the U.S. last week, driving stronger demand. Cold weather also
halted some production last week, according to energy-advisory firm Gelber & Associates.

  "Finally we got a real winter scenario," said Bob Yawger, director of the futures division at Mizuho Securities USA
Inc. "That had been something that was not showing up."

  Storage withdrawals could near 200 bcf a week in the next two weeks due to continued cold weather, said Kyle Cooper,
an analyst at IAF Advisors in Houston.

  "We are entering the historically coldest time of year," Mr. Cooper said. "We still have high relative inventory
levels to deal with, but the underlying balance is actually quite bullish."

FUTURES        SETTLEMENT NET CHANGE
Nymex February $2.382     +11.5c
Nymex March    $2.394     +10.5c
Nymex April    $2.430      +8.6c

CASH HUB         RANGE        PREVIOUS SESSION
El Paso Perm     $2.305-$2.35 $2.30-$2.36
El Paso SJ       $2.34-$2.46  $2.38-$2.42
Henry Hub        $2.315-$2.42 $2.315-$2.375
Katy             $2.26-$2.30  $2.28-$2.35
SoCal            $2.43-$2.57  $2.52-$2.60
Tex East M3      $1.57-$1.63  $2.25-$2.37
Transco 65       $2.315-$2.36 $2.30-$2.36
Transco Z6       $2.50-$2.65  $2.85-$3.10
Waha             $2.32-$2.33  $2.30-$2.365


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


  (END) Dow Jones Newswires

  January 07, 2016 16:18 ET (21:18 GMT)

  Copyright (c) 2016 Dow Jones & Company, Inc.

010716 21:18 -- GMT
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