By Timothy Puko
Natural gas took one of its hardest falls of the past month Monday as traders are becoming wary of the market's
ability to meet high expectations for demand.
Natural gas for August delivery settled down 9.9 cents, or 3.5%, at $2.702 a million British thermal units on the New
York Mercantile Exchange, its lowest settlement in two weeks. The market is now down 9.5% since it soared to a one-year
high to start the month.
The fuel gained more than half in less than five weeks by the start of July with speculators betting hard that a
slowdown in drilling, hot weather and increasing gas demand from the power sector would ease a glut in the market.
"We've made so much movement in the last month, the market's in a situation where if anything doesn't call for a hot
July, it just falls," said Kent Bayazitoglu, analyst at the energy-consulting firm Gelber & Associates in Houston.
"It's set up to a point where it doesn't take much for a fall."
As gas has become more expensive, power generators have been switching to burn more coal instead of gas. Even though
weather has been hot and power demand is up to help people run their air conditioners, increasing coal consumption has
started translating into disappointing gas demand from the hot weather, brokers and analysts said.
Differing weather models deepened concerns about demand on Monday, Mr. Bayazitoglu said. While European-designed
models showed hotter-than-average weather spreading across the whole country next week, U.S. models show a cool spell
for much of the country, lowering some expectations for demand, he added.
Many forecasters' long-term predictions for hot weather are beginning to be doubted, others said. Weather updates for
about two weeks out are starting to show some extreme-above-average temperatures, even warmer than the previous
forecasts. But weather models that have predicted extreme heat two weeks out keep proving incorrect, sparking the
selloff, Mr. Cooper said.
"The 11 to 15 day (forecast) is just coming in blazing hot, then it moderates significantly," he said.
Write to Timothy Puko at tim.puko@wsj.com
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codes: N/DRV N/EGY N/MKT N/NGS N/PRC N/SNEW N/DJCS N/DJN N/NRG O/NRG I/EQS A/28045 A/28072 R/NME R/US
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Timothy Puko
ENERGY REPORTER
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(END) Dow Jones Newswires
July 11, 2016 14:52 ET (18:52 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
071116 18:52 -- GMT
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