Dow Jones - Natural Gas Erases Losses

DJ Natural Gas Erases Losses


   By Nicole Friedman


  NEW YORK--Natural-gas prices rose Tuesday, erasing earlier losses, as traders bet that ultralow prices would help
shrink the glut of the fuel.

  The natural-gas market is oversupplied, as mild weather has reduced demand for gas as an indoor-heating fuel and
production has remained high. Natural-gas inventories stood 29% above the five-year average for this time of the year
as of Feb. 19, according to the Energy Information Administration.

  Prices fell during intraday trading to their lowest level since March 1999 on concerns that the glut of natural gas
could overwhelm storage capacity by next fall.

  "The temperature forecast continues to feature warmer than normal temperatures for most of the continental U.S.,
undercutting late winter heating demand to a degree that will severely limit the pull from storage," said Tim Evans,
analyst at Citigroup Inc., in a note.

  But futures for April delivery recovered later in the session to settle up 3.1 cents, or 1.8%, at $1.742 a million
British thermal units on the New York Mercantile Exchange.

  Low prices are expected to spur new demand and force producers to cut back further on output.

  Some market watchers pointed to an announcement from Tallgrass Energy that capacity has been reduced on a pipeline
that runs through Ohio. However, that news alone is unlikely to have caused the rally, said Kent Bayazitoglu, analyst
at energy-advisory form Gelber & Associates in Houston.

  "Demand is low, the weather is mild and there's just a lot of gas in storage, so these interruptions shouldn't have
an impact on price," he said. He attributed the price rise to traders betting that natural gas prices had hit a bottom.


   FUTURES       SETTLEMENT   NET CHANGE
   Nymex April       $1.742        +3.1c
   Nymex May         $1.848        +4.0c
   Nymex June        $1.939        +4.3c

   CASH HUB                RANGE   PREVIOUS SESSION
   El Paso Perm      $1.40-$1.50       $1.395-$1.45
   El Paso SJ      $1.4075-$1.45       $1.385-$1.43
   Henry Hub       $1.5575-$1.59        $1.55-$1.65
   Katy              $1.50-$1.54        $1.53-$1.57
   SoCal          $1.465-$1.5025        $1.48-$1.50
   Tex East M3       $1.27-$1.35       $1.02-$1.075
   Transco 65       $1.535-$1.59       $1.51-$1.585
   Transco Z6        $1.57-$1.62       $1.085-$1.15
   Waha              $1.46-$1.53        $1.47-$1.50


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


  (END) Dow Jones Newswires

  March 01, 2016 15:18 ET (20:18 GMT)

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

030116 20:18 -- GMT
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