DJ Natural Gas Rises After Unexpectedly Small Storage Addition
By Timothy Puko
Natural-gas prices inched up Thursday after government data showed a smaller-than-expected addition to stockpiles.
The U.S. Energy Information Administration said stockpiles grew by 73 billion cubic feet last week, compared to the
78 bcf expected by 17 forecasters surveyed by The Wall Street Journal. The report is a widely watched measure of supply
and demand. A smaller-than-expected addition to storage likely indicates smaller supply or larger demand than expected.
Natural gas for June delivery settled up 3.8 cents, or 1.9%, to $2.039 a million British thermal units on the New
York Mercantile Exchange. The gains are only the second in the past six sessions and pull gas off a three-week low it
hit Wednesday.
A cooler-than-normal spring has led to stronger-than-expected heating demand, said Andy Huenefeld, price risk manager
at U.S. Energy Services Inc. in Louisville, Ky. Production has also been about 3% weaker this month than the record
high average it hit in February, according to Platts Analytics, a forecasting and analytics unit of S&P Global Platts.
John Woods, president of JJ Woods Associates and a Nymex trader and frequently bullish on prices in recent months,
said they could go up another 30 cents. Many traders have been betting that a strong La Ni?a weather phenomenon
could bring extreme hot weather this summer and strong demand for gas-fired power to run air conditioners.
"If you're going to go (bearish) here, you're basically dismissing any type of weather," Mr. Woods said.
The addition put inventories as of May 13 at 2.8 trillion cubic feet, 40% above levels from a year ago and 41% above
the five-year average for the same week. While the surplus is large, last week's addition wasn't as large as the 98-bcf
addition from this week a year ago, which helped prices rise, said Tim Evans, analyst at Citi Futures Perspective in
New York.
But the surplus compared to years past isn't shrinking quickly enough to avoid carrying a major glut into next
winter's high-demand heating season, energy investment bank Tudor, Pickering, Holt & Co. said in a note.
"We would still like to see lower prices (or) more demand (now) to allow a smooth transition to higher...prices late
this year," the bank said. It has previously forecast prices at $3.65/mmBtu for 2017.
Write to Timothy Puko at tim.puko@wsj.com
Corrections & Amplifications
This was corrected at 3:40 p.m. ET because the original incorrectly reported the close for June delivery in the third
paragraphas down 3.8 cents.
(END) Dow Jones Newswires
May 19, 2016 15:26 ET (19:26 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
051916 19:26 -- GMT
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