Dow Jones - Natural Gas Sinks On Warm Weather February Forecast

DJ Natural Gas Sinks on Warm February Forecast


   By Timothy Puko


  Natural gas prices are falling, trading at their lowest point in nearly two months after weather forecasters removed
almost all signs of frigid weather from the late-February forecast, a bad sign for heating-fuel demand.

  Futures for March delivery recently fell 7.4 cents, or 3.7%, to $1.892 a million British thermal units on the New
York Mercantile Exchange. That is the lowest price in intraday trading since Dec. 23. Gas has lost nearly 12% in what's
on pace to be five straight losing sessions.

  Weather reports are showing normal to far-above normal temperatures blanketing most of the country through March 1.
About half of U.S. households use natural gas as their primary heating fuel, so a lack of winter cold often can drag
prices lower.

  The problem is worse this year because stockpiles are so high, analysts said. Prices already plummeted to an
inflation-adjusted low in the history of Nymex trading late last year because of the combination of record-high
production and tepid heating demand tied to unseasonably warm weather.

  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 2016. The latest forecasts would raise those
expectations.

  The U.S. Energy Information Administration said Thursday that a far-below-normal drain on stockpiles last week left
them 25% above levels from a year ago and 23% above the five-year average for the same week.

  "The outlook remains very bearish," the London-based research house Energy Aspects said in a note about the market
titled "Squeezed." The firm called for weak prices through at least June and kept its forecast for an average price of
$2.35/mmBtu for the year.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $1.915/mmBtu, compared with a range
of $1.99-$2.075 on Friday. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $1.93/mmBtu to
$2.08/mmBtu, compared with Friday's range of $7.05-$8.00.


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


  (END) Dow Jones Newswires

  February 16, 2016 10:05 ET (15:05 GMT)

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

021616 15:05 -- GMT
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