Dow Jones - Natural Gas Falls On Supply Concerns

DJ Natural Gas Falls on Supply Concerns

  By Nicole Friedman

  NEW YORK--Natural gas prices fell for a third straight session Monday on continued concerns about oversupply.

  Natural gas futures for June delivery settled down 6.7 cents, or 3.2%, to $2.029 a million British thermal units on
the New York Mercantile Exchange, the lowest settlement since April 27.

  Natural-gas inventories stand 44% above the five-year average for this time of year, and stockpiles are expected to
keep growing through October as producers stash away fuel ahead of the high-demand winter season. Some analysts warn
that storage tanks and caverns could run out of room to hold gas by the fall.

  "A need still exists to reduce weekly injections by around 22% on average in order to preclude a challenge of storage
capacity next fall," said energy-advisory firm Ritterbusch & Associates in a note. "Unless an early start to a hot
summer develops to further this downsizing of injections, a low pricing environment may be required to slow storage
increases."

  Forecasts for colder temperatures boosted prices last week, but weather outlooks turned more normal this week, said
Dominick Chirichella, analyst at the Energy Management Institute. "With seasonable temperatures now emerging over the
country there is likely to be only minimal if any heating...demand," he said in a note.

  The Canadian natural-gas market is also oversupplied, and it is cheaper in some regions of the U.S. to import
Canadian gas than to buy domestic fuel, said Morgan Stanley in a note. "Cheapening Canadian gas may flood the U.S. this
summer," the bank said.

  However, natural-gas production is likely to fall this year due to cutbacks in spending on new drilling, analysts
say. The Energy Information Administration on Monday forecast that production in the seven key U.S. shale-drilling
regions would fall by 464 million cubic feet per day in June compared with May.

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

  (END) Dow Jones Newswires

  May 16, 2016 16:15 ET (20:15 GMT)

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

051616 20:15 -- GMT
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