DJ Natural Gas Rally Gives Way to Skepticism
By Timothy Puko
Natural-gas prices turned down in early trading Wednesday, putting a March rally into limbo amid continued skepticism
that producers will slow down despite heavy stockpiles and low prices.
Natural-gas futures for April delivery recently fell 0.9% at $1.834 a million British thermal units on the New York
Mercantile Exchange. Prices had been up 13% after Tuesday's session, the seventh winning session in the last eight.
One of the natural gas exchange-traded funds has started rolling the gas contracts it holds from April to the next
month, selling that can sometimes cause prices to fall, said Scott Gettleman, an independent trader in New York.
Trading volume has also been light, which can exacerbate price moves.
And there is also widespread skepticism about the recent rally. Stockpiles are around a record high for the end of
winter after mild weather limited heating demand. Producers have also been near record highs for output despite the
limited demand and have yet to slow down substantially.
The number of working rigs has dropped to historic lows, but production has risen in past years despite fewer rigs at
work. And money managers have still been adding to bets against prices in recent weeks, holding nearly two bearish
positions on Nymex gas futures for every bullish position, according to regulatory data.
"Too many things need to go right for the bulls," Scott Shelton, broker at ICAP PLC said in note. "I also remain
personally scarred by the last 3-5 years of optimism on production that continually says 'ITS DIFFERENT THIS TIME.'"
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $1.77/mmBtu, compared with Tuesday's
range of $1.75-$1.81. Cash prices at the Transco Z6 hub in New York last traded at $1.19/mmBtu, compared with Tuesday's
range of $1.14-$1.22.
Write to Timothy Puko at tim.puko@wsj.com
(END) Dow Jones Newswires
March 16, 2016 10:22 ET (14:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
031616 14:22 -- GMT
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