Dow Jones - Natural Gas Slips With Traders Wary

DJ Natural Gas Slips with Traders Wary


   By Timothy Puko


  Natural gas prices fell Monday as lingering concerns about a storage glut and fragile demand keep a lid on the
market.

  Natural gas for August delivery settled down 3.4 cents, or 1.2%, to $2.722 per million British thermal units on the
New York Mercantile Exchange. Trading stayed within an 8-cent range and has settled between $2.702/mmBtu and
$2.801/mmBtu for ten-straight sessions.

  Natural-gas trading has been especially tight with traders now wary about gas's next turn after it spent all of June
on one of the sharpest rallies among all investments. Natural gas gained more than $1/mmBtu--more than 50%--in just one
month as of July 1.

  The rally came in part from rising demands for gas-fired power as hot weather and forecasts for more led traders to
believe air conditioners would be running strong, sucking up a lot of energy. Demand did rise, but has faltered in
recent weeks, leading some to question whether the rally is over.

  As gas nears $3/mmBtu, more power plants have switched to burning coal instead. Many are still fearful hot forecasts
won't translate into growing demand and the chance a record amount of gas in storage heading into the winter, said Kent
Bayazitoglu, analyst at the energy-consulting firm Gelber & Associates in Houston

  "There's been so much expectation for a very hot week, any time there's a crack in the forecast prices start to
fall," he said.

  That is balanced out by weather forecasts still hotter-than-average for weeks to come and long-term expectations that
are still high. A warm winter left a record amount of the heating fuel in storage to start the spring, but the surplus
from a year ago that was more than 50% has already dwindled to less than 20%. That has some betting on a shortage to
come by next year.

  The market has entered a stasis until more demand shows which ideas are coming to pass, said John Woods, president of
JJ Woods Associates and a Nymex floor trader. He is betting prices could still rally to $3/mmBtu from summer demand,
but said the potential is limited.

  "This stuff is still heading sideways," Mr. Woods said. "You're going to have to have that follow-through, and it
just hasn't materialized."


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


  (END) Dow Jones Newswires

  July 18, 2016 15:57 ET (19:57 GMT)

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

071816 19:57 -- GMT