DJ Natural Gas Prices Edge Up Ahead of Inventory Data
By Christian Berthelsen
Natural-gas futures chopped around the break-even point Thursday ahead of weekly U.S. government supply data that are
expected to show an increase in stored inventories.
Natural-gas futures were up 0.3% at $2.0760 a million British thermal units on the New York Mercantile Exchange,
after trading around two-month highs on Wednesday. The market has rallied in recent weeks as prolonged cool
temperatures to start spring have encouraged hopes for late-season heating demand after a tepid winter, and as evidence
has mounted that booming U.S. production is starting to wane.
"Declining production to below year-ago levels is providing a key source of support," research consultancy
Ritterbusch and Associates said in a note. The rapid decline of rigs drilling for oil in the U.S., which has fallen
nearly 80% in the last year, has also begun to reduce gas supplies, a by-product of oil production.
Temperature outlooks are beginning to reflect more spring-like weather, but the overall picture remains little
changed for gas-fired heating and cooling demand. While the latest forecasts show the south and eastern seaboard
heating up into early May, above-normal temperatures in the West are beginning to wane.
The eastern warm-up could sap the last dregs of heating demand, while the Western cool-down could drag down cooling
demand. Natural gas is used to heat more than half of U.S. homes, and also serves as a fuel source for power plants
that generate electricity to meet air-conditioning demand.
The forecast "is not likely to result in a surge in heating-related demand nor a strong and early call on natural gas
for cooling-related demand," Dominick Chirichella of the Energy Management Institute said in a note.
The U.S. Energy Department is scheduled to report weekly inventory data at 10:30 a.m. ET. The data is expected to
show a 2-billion-cubic-foot increase in stored natural-gas supplies for the week ended April 15, according to the
consensus estimate of analysts surveyed by The Wall Street Journal.
Spring is normally the time of year when supplies begin rising instead of falling as gas demand wanes, though the
projected increase, if accurate, would be well below the 45 bcf average for this time of year. Still, stored supplies
remain robust after a mild winter that sapped demand and strong production; if the estimate is correct, inventories
will be 49% above average for this time of year.
Write to Christian Berthelsen at christian.berthelsen@wsj.com
(END) Dow Jones Newswires
April 21, 2016 09:40 ET (13:40 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
042116 13:40 -- GMT
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