Dow Jones - Natural Gas Ticks Lower As Heavy Stockpiles Weigh On Market

DJ Natural Gas Ticks Lower as Heavy Stockpiles Weigh on Market


   By Timothy Puko


  Natural-gas prices are inching lower in light trading Thursday as a glut leftover from the winter continues to pull
the market back from recent gains.

  Natural gas for June delivery is down 0.4 cent, or 2%, at $1.952 a million British thermal units on the New York
Mercantile Exchange. The June contract expires at settlement. The more actively traded July contract is down 1.3 cents,
or 0.6%, at $2.168.

  Unless prices pick up, this would be the third losing session of the last four. The lingering glut in storage left
over from the warm winter has pulled gas back from a rally that had sent prices surging earlier in the spring.
Stockpiles often rise at this time of year and prices often fall because weather is too warm to spur substantial
heating demand, but too cool to cause increasing demand for gas-fired power to run air conditioners.

  Production has weakened and demand has strengthened enough to keep stockpiles from growing as fast as they usually do
so far this spring. But that isn't happening quickly enough to substantially shrink the surplus compared with years
past and burn off enough gas to avoid carrying a major glut into next winter's high-demand heating season, analysts
have said.

  "It is becoming increasingly apparent that weekly builds (in inventories) will need to be forced much lower" to avoid
testing the capacity of U.S. natural-gas storage in the fall, Jim Ritterbusch, president of energy-advisory firm
Ritterbusch & Associates, said in a note. "This appears to be a market in dire need of some hot temperatures" to drive
demand for gas-fired power.

  Futures have traded in a range of just five cents, a stability common on Thursday mornings ahead of the U.S. Energy
Information Administration's weekly update on storage levels, scheduled for 10:30 a.m. EDT. Many traders consolidate
positions ahead of the report and trade after it, because it is widely monitored as a weekly measure of how supply is
balancing with demand.

  This week's update is likely to show storage levels grew by 68 billion cubic feet, according to the average of 18
forecasters surveyed by The Wall Street Journal. That would put total inventories as of May 20 at 2.8 trillion cubic
feet, 36% above levels from a year ago and 37% above the five-year average for the same week.


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


  (END) Dow Jones Newswires

  May 26, 2016 10:14 ET (14:14 GMT)

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

052616 14:14 -- GMT
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