DJ Natural Gas Falls to One-Month Low as High Stockpiles Weigh on Prices
By Timothy Puko
Natural-gas prices plunged back below the $2-mark Tuesday as a heavy surplus and mixed weather forecasts are causing
possibly the largest daily losses of the year.
Gas futures have been plumbing historic lows in recent months because of record-high production and stockpiles, and
tepid heating demand Weather for the coming weeks suggests that heating demand will be around normal, and without
exceptional demand, high stockpiles leftover from last year will keep the market glutted and prices low, brokers and
analysts said.
The market has now lost about 13% in less than two sessions after it ended last week at nearly a three-week high.
Futures for March delivery recently fell 14.1 cents, or 6.6%, to $2.011 a million British thermal units. They traded as
low as $1.984/mmBtu and are still trading at their lowest point in more than a month.
Stockpiles stood 16% above the five-year average and 21% from last year's levels as of Jan. 22, the most recent data
available from the U.S. Energy Information Administration. Since the winter started with historically warm weather and
light draws on stockpiles, many analysts have been predicting that stockpiles will challenge their record-high for the
end of winter.
"This is the time of the year where extreme cold could make up for a warm December very very quickly, but it's simply
not the case," said Scott Shelton, broker at ICAP PLC. "We are going to get (through) the coldest part of winter with
very little cold weather."
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.015/mmBtu, compared with Monday's
range of $2.16 to $2.20. Cash prices at the Transco Z6 hub in New York last traded at $1.55/mmBtu, compared with
Monday's range of $2.05 to $2.13.
Write to Timothy Puko at tim.puko@wsj.com
(END) Dow Jones Newswires
February 02, 2016 11:00 ET (16:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
020216 16:00 -- GMT
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