Dow Jones - Natural Gas Falls With Stockpiles Still High

DJ Natural Gas Falls With Stockpiles Still High



  By Timothy Puko


  Natural gas prices retreated from gains in early trading Tuesday as heavy stockpiles continue to keep a lid on any
rally.

  Futures for March delivery recently fell 1.8 cents, or 0.8%, to $2.122 a million British thermal units. The retreat
comes after gas prices posted their largest two-session gain in a month, rising 8.5%, as a burst of cold weather in the
forecast suggested stronger demand for the heating fuel.

  The problem for rising prices is that the coming cold weather may not be enough to help a glutted market. Last year
brought record-high production but then soft heating demand from a mild fall and early winter pushed a record-high
amount of gas into storage.

  Production hasn't fallen sharply since then, so stockpiles may still challenge their high point for winter's end
without a lengthy stretch of extreme cold weather, analysts said.

  From Saturday into early next week, the Gulf Coast could see highs in just the 20s and 30s, and temperatures 15 to 25
degrees Fahrenheit below normal, according to Weather Services International in Andover, Mass.

  But those temperatures could be almost completely gone from the forecast by Feb. 16, WSI said. They will be replaced
by above-normal temperatures, some far-above normal, spreading over nearly the entire country.

  The rest of this winter would have to be colder than normal to generate about 21% more heating-degree days, a metric
of weather-related demand, to overcome what was lost from a warm start to winter, said Dominick Chirichella, analyst at
the Energy Management Institute.

  "Based on the latest longer term forecasts this still does not seem likely," he said.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.18/mmBtu, compared with Monday's
range of $2.20 to $2.40. Cash prices at the Transco Z6 hub in New York last traded at $3.75/mmBtu, compared with
Monday's range of $2.75 to $4.00.


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


  (END) Dow Jones Newswires

  February 09, 2016 11:10 ET (16:10 GMT)

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

020916 16:10 -- GMT
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