Dow Jones - Natural Gas Falls As Glut Causes Retreat

DJ Natural Gas Falls as Glut Causes Retreat

By Timothy Puko

     Natural gas prices tumbled Thursday after new government data confirmed a growing glut in storage.

     The U.S. Energy Information Administration said stockpiles grew by 68 billion cubic feet of natural gas in storage
in the week ended April 29. That is two bcf more than the average forecast from analysts and traders surveyed by The
Wall Street Journal, and adds to storage levels that had just hit a record for the end of winter.

     Natural gas for June delivery settled down 6.5 cents, or 3%, to $2.076 a million British thermal units on the
Nymex. The retreat pulls gas back from some of its highest prices of the year, which it had hit before the EIA's data
release. Rallies have often failed to move gas very far because of the glut in storage.

     "In short-term trading, you have to look at the downside because that's what history tells us: Every time it picks
its head up, it gets smacked back," said Scott Gettleman, an independent trader in New York.

     Historic warm weather limited heating demand this past winter and stockpiles finished last week 49% above levels
from a year ago and 47% above the five-year average for the same week, according to EIA data. That glut is capping the
rallies that have come from traders betting that deep spending cuts from producers will lead the market to balance
later this year or early in 2017, Mr. Gettleman and analysts said.

     "Given the massive amounts of gas in the storage, neutral storage changes are essentially bearish," said Kent
Bayazitoglu, analyst at the energy-consulting firm Gelber & Associates in Houston. "Injections need to be remain below
average to prevent storage from an overfill situation."

     Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, warned clients Thursday that prices
could fall another 20 cents because the storage glut left from the winter is still so large.

     "Our rally seems to be stalling for the moment due to the near record amount of gas in the ground," said Gene
McGillian, an analyst at Tradition Energy.

     Write to Timothy Puko at tim.puko@wsj.com


  (END) Dow Jones Newswires

  May 05, 2016 15:44 ET (19:44 GMT)

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

050516 19:44 -- GMT
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