Dow Jones - Natural Gas Loses Steam As Weather Forecasts Cool

DJ Natural Gas Loses Steam as Weather Forecasts Cool


   By Timothy Puko


  Natural gas prices erased gains Monday after midday weather updates pulled back from hot forecasts that had stoked
expectations for strong demand.

  Natural gas for June delivery lost 0.7 cent, or 0.3%, to settle at $2.055 a million British thermal units on the New
York Mercantile Exchange. The retreat from gains brought gas back to the middle of a 19-cent trading range it has
settled in every session for a month.

  The summer months often bring higher demand for gas-fired power to run air conditioners, which had helped push prices
to a 10-day high in early trading. But Monday's midday weather forecasts showed cooler temperatures in the southeast
than the overnight updates showed, and that weakens demand expectations in the biggest region for gas-fired power, said
Zane Curry, a gas analyst at Mobius Risk Group in Houston.

  The gas market may need an extreme amount of heat to drive enough demand for air conditioning and gas-fired power to
burn off a glut left over from winter, analysts have said. Storage levels as of May 13 hit 2.8 trillion cubic feet, 40%
above levels from a year ago and 41% above the five-year average for the same week.

  "Storage inventory is still extremely bloated," Mr. Curry said. "So any time the market sees cool -- below normal --
temperatures in the southern tier of the country ... then you're going to have a tendency to push prices back to the
bottom of the trading range."

  Overnight weather updates had shown the beginning of summer-like weather in large parts of the country. Futures
jumped as soon as electronic markets opened Sunday evening, often a sign gas traders are reacting to weather updates.

  MDA Weather Services in Maryland forecast highs of 70-degrees Fahrenheit from Chicago to New York throughout this
week and into early next week, and 80-degree highs in Dallas and Houston. High temperatures in Chicago and New York
will at times be more than 10-degrees above normal and feeds an increase in national energy demand, according to MDA
and Commodity Weather Group.

  "We haven't had a hot summer in a few years, but if we do get one, people might be shocked about how much gas we use
in the summer," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. "Natural gas is looking
more and more like it's hit bottom."


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


  (END) Dow Jones Newswires

  May 23, 2016 14:53 ET (18:53 GMT)

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

052316 18:53 -- GMT
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