Dow Jones - Natural Gas Falls As Stockpiles Rise

DJ Natural Gas Falls as Stockpiles Rise



  By Timothy Puko


  Natural gas prices inched lower on Thursday, after government data showed U.S. stockpiles grew more than expected
last week.

  The U.S. Energy Information Administration said natural-gas inventories grew by 64 billion cubic feet last week,
compared to the 56 bcf expected by forecasters surveyed by The Wall Street Journal. The report is a widely watched
measure of supply and demand. A larger-than-expected addition to storage likely indicates more supply or smaller demand
than expected.

  Natural gas futures for August delivery settled down 1 cent, or 0.4%, to $2.727 a million British thermal units on
the New York Mercantile Exchange. Trading stayed within a 6-cent range.

  Prices initially inched higher after the data. Many people are betting that with production coming off of record
highs and the number of working gas-drilling at historic lows, a glut left over from the winter will ease as rising
demand from power and industrial plants burns it off.

  The balance has already shifted enough that weekly surpluses have been coming in below average. That is leading many
to bet the amount of gas in storage will fall below levels from a year ago before the winter, analysts and traders
said.

  "You still have enough people out there who believe we're going to end up below last year's inventory level, or even
... below the five-year average," said Zane Curry, a gas analyst at Mobius Risk Group in Houston. "Personally I can't
do any reasonable math that gets me there."

  Storage levels were still 19% above levels from a year ago and 22% above the five-year average, rising to 3.2
trillion cubic feet as of July 8, EIA said. Many still expect storage levels to rise to 4 trillion cubic feet by the
start of the winter and challenge the record highs.

  That will keep putting pressure on prices, analysts and traders said. Many are waiting to see if hot weather pans or,
or if hotter weather arrives to drive the demand for gas-fired power to run air conditioners that bullish gas traders
are looking for, analysts said.

  Prices must hold above $2.66/mmBtu for the bulls who rushed into the market in recent weeks, said Donald Morton,
senior vice president at Herbert J. Sims & Co., who runs an energy-trading desk. The market is already down 8.7% from
the one-year high it settled at July 1.

  Fall "below and all heck will break out as [buyers] move to liquidate," Mr. Morton said.

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

  (END) Dow Jones Newswires

  July 14, 2016 15:16 ET (19:16 GMT)

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

071416 19:16 -- GMT
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