DJ Natural Gas Sinks on Weather Outlook
By Timothy Puko
Natural-gas prices fell Friday morning toward a seven-week low as warm weather forecasts for late February reinforce
concerns about weak demand and bulging stockpiles.
Futures for March delivery recently fell 2.7 cents, or 1.4%, to $1.967 a million British thermal units on the New
York Mercantile Exchange. Gas has lost 8.1% in what's on pace to be four-straight losing sessions.
Weather reports are showing an East-Coast cold front passing quickly, replaced by above-, and sometimes
far-above-normal temperatures throughout the second half of February. About half of U.S. households use natural gas as
their primary heating fuel, so a lack of winter cold can often drag prices lower.
The problem is worse this year because stockpiles are so high, analysts said. Prices already plummeted to an
inflation-adjust 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 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. That kind of surplus is likely to keep natural gas selling cheaply, a
trader and broker said.
"Energy's on sale all over the world," said Scott Gettleman, an independent trader in New York.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $1.99/mmBtu, compared with a range of
$2.11-$2.13 on Thursday. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $7.25/mmBtu to
$11.00/mmBtu, compared with Thursday's range of $5.20-$6.05.
Write to Timothy Puko at timothy.puko@wsj.com
(END) Dow Jones Newswires
February 12, 2016 10:43 ET (15:43 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
021216 15:43 -- GMT
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