Dow Jones - Natural Gas Sinks On Weather Outlook

DJ Natural Gas Sinks on Weather Outlook


   By Timothy Puko


  Natural-gas prices retreated Tuesday on renewed concerns about weak demand and bulging stockpiles.

  Futures for February delivery recently fell 5.7 cents, or 2.4%, to $2.277 a million British thermal units.
Natural-gas futures have stabilized since a seven-session surge put them into a bull market a week ago. They have
traded between $2.188/mmBtu and $2.387/mmBtu for five sessions, with Tuesday's prices right in the middle of that
range.

  Updated weather forecasts Tuesday show an ongoing cold-spell and spike in heating demand could be shorter than
expected. About half of U.S. households use natural gas as their primary heating fuel, making winter weather the
market's primary driver for prices.

  An ongoing cold spell in the East is likely to give way to unseasonably warm temperatures by the end of the week,
according to weather forecasts. They also show next week's cold blast coming to the Midwest looking slightly less
severe than expected and then followed by close-to-normal temperatures covering the entire country.

  That is a big problem for gas prices because stockpiles are so high, analysts said. Many are predicting that without
an extreme spell of cold and high heating demand, stockpiles will finish the winter at or near record levels, possibly
causing a glut to linger deep into next year.

  "Most of the (weather) models appear to be favoring much volatility with extreme cold apt to be followed by a
significant warmup," Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, said in a note.
"Consequently, occasional severe cold spells may not prove capable" of balancing the market.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.33/mmBtu, compared with Monday's
range of $2.32 to $2.415. Cash prices at the Transco Z6 hub in New York last traded at $3.30/mmBtu, compared with
Monday's range of $6.00 to $9.00.


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


  (END) Dow Jones Newswires

  January 05, 2016 10:39 ET (15:39 GMT)

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

010516 15:39 -- GMT
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