Dow Jones - Natural Gas Rebounds As Weather Turns Colder

DJ Natural Gas Rebounds as Weather Turns Colder

By Timothy Puko

     Natural gas rebounded to small gains in topsy-turvy trading after noon weather updates show signs that a coming
cold spell could hang on in the east into next week.

     Futures for February delivery settled up 2 cents, or 0.9%, at $2.138 a million British thermal units on the New
York Mercantile Exchange. Losses had hit 1.8% in late-morning trading before the rebound.

     Noon updates to popular weather models showed lower temperatures than previously expected in the eastern states
six to 10 days out, according to WeatherBELL Analytics LLC. About half of U.S. homes use gas for heat, making winter
weather the market's biggest driver.

     Traders have already been monitoring the weather because of a potential blizzard coming this weekend. Parts of the
East Coast and mid-Atlantic states could get as much as 2 feet of snow and temperatures below 20 degrees Fahrenheit,
according to Weather Services International in Andover, Mass. Some expect that to raise demand for heat, though others
warn it could knock out power and drag on demand for natural gas to fuel power plants.

     Traders said the new signs of cold helped reverse a downturn in prices earlier in the day. The market had sold off
after the U.S. Energy Information Administration said gas stockpiles fell by 178 billion cubic feet in the week ended
Jan. 15, 7 bcf less than the average forecast from analysts and traders surveyed by The Wall Street Journal.

     "Every selloff is being met with aggressive buying," said Scott Gettleman, an independent trader in New York. "And
you probably don't want to be (in a bearish position) with a potential huge storm rolling in."

     Some did say that the gains could be short-lived. The EIA update is widely considered one of the best measures of
supply and demand for the natural gas market. The smaller-than-expected drawdown from stockpiles would suggest smaller
demand or larger supply than expected.

     That could be a sign that an economic slowdown widely feared by investors is affecting the natural gas market,
said Kent Bayazitoglu, analyst at the energy-consulting firm Gelber & Associates in Houston. Industrial demand for the
week ending Jan. 13 was down 6.5% compared with the same week a year ago, according to data EIA gathered from Bentek
Energy.

     "Typically if we had prices this low, we'd see more demand," Mr. Bayazitoglu said.

     About a month ago prices fell to an all-time inflation-adjusted low in gas's history of Nymex trading. A brief
surge followed, but gas quickly retreated, down about 9% year-to-date and off about 30% from its 52-week high.

     A historically strong El Ni??o weather phenomenon sharply limited demand for the heating fuel late last year
just as rampant production had pushed stockpiles to an all-time high. Many traders are worried the shortened winter
will keep stockpiles bulging far into next year. Stockpiles ended last week 24% above levels from a year ago and 17%
above the five-year average for the same week, EIA data show.

     Write to Timothy Puko at tim.puko@wsj.com


  (END) Dow Jones Newswires

  January 21, 2016 15:12 ET (20:12 GMT)

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

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