DJ Natural Gas Prices Rise
By Nicole Friedman
NEW YORK--Natural gas futures rose Tuesday as traders took profits after a sharp price slide Monday.
Futures for June delivery recently rose 4.9 cents, or 2.4%, to $2.091 a million British thermal units on the New York
Mercantile Exchange.
Prices dropped 6.2% Monday as weather forecasts indicated minimal need for gas-powered indoor heating in the next two
weeks. The natural gas market is already oversupplied, with storage levels 48% above the five-year average for this
time of year, due to robust production and sluggish heating demand.
Monday's price gains "appear to be a light short covering after yesterday's sell-off," said Dominick Chirichella,
analyst at the Energy Management Institute, in a note.
Natural-gas prices are likely to hover around these levels until weather forecasts give a clearer indication of what
to expect from summer temperatures, analysts say. Hot weather in the summer can increase demand for gas-powered
electricity to run air-conditioning units.
Many traders and analysts expect natural-gas prices to rise in late 2016 or 2017 as production falls to lower
spending on new drilling and demand increases. But some warn that prices could fall to new lows before recovering if
storage levels near full capacity.
"Bulls can continue to cite some recent production slippage that is finally seeing translation from the plunge in the
rig counts," said energy-advisory firm Ritterbusch & Associates in a note. "On the other hand, bears can indicate a
near record level of storage."
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
May 03, 2016 10:19 ET (14:19 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
050316 14:19 -- GMT
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