Dow Jones - Natural Gas Sinks On Oversupply

DJ Natural Gas Sinks on Oversupply

  By Nicole Friedman

  NEW YORK--Natural-gas prices held near 17-year lows Friday amid concerns about the heavily oversupplied market.

  Natural gas futures for April delivery recently fell 1.1 cents, or 0.6%, to $1.774 a million British thermal units on
the New York Mercantile Exchange. Prices fell to their lowest level since 1999 on Thursday as the contract for March
delivery expired.

  Warmer-than-average temperatures have cut demand for natural gas as an indoor-heating fuel, forcing producers to keep
more gas in storage.

  Natural-gas inventories fell by 117 billion cubic feet of natural gas in the week ended Feb. 19, the Energy
Information Administration said Thursday, less than the 138-bcf decline that analysts surveyed by The Wall Street
Journal had expected.

  Stockpiles as of Feb. 19 stood 29% above the five-year average for this time of year.

  Weather forecasts for the next two weeks continue to call for moderate heating demand.

  "With warmer weather now building into the calendar, the outlook for storage is deeply bearish," said Richard
Hastings, analyst at Seaport Global Securities LLC, in a note. "Risks of deeper price erosion towards $1.50/mmBtu and
even less are rising, in our view."

  Market participants have long expected the start of U.S. natural-gas exports to boost the market, as the domestic
glut could be absorbed by overseas demand. But a glut of natural gas around the world has pushed down international
prices and made U.S. liquefied natural gas less competitive. The first LNG tanker sailed from the U.S. Thursday.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $1.66/mmBtu, compared with Thursday's
range of $1.74-$1.775. Cash prices at the Transco Z6 hub in New York last traded at $1.20/mmBtu, compared with
Thursday's range of $1.87-$1.95.

  Write to Nicole Friedman at nicole.friedman@wsj.com

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  February 26, 2016 09:41 ET (14:41 GMT)

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