Dow Jones - End Of Day Commentary

DJ Natural Gas Retreats as Weather Forecasts Cool


   By Timothy Puko


  NEW YORK--Natural-gas prices closed lower Wednesday as weather forecasts
pulled back hopes for a late-summer bump in demand.

  The front-month September contract settled down 5.4 cents, or 1.4%, at $3.823
a million British thermal units on the New York Mercantile Exchange. The price
held near the middle of a 29-cent trading range that gas has stayed in for the
past month.

  Several weather models are showing unseasonably cool weather spreading from
the North starting next week. Cool summer weather limits how much consumers use
their air conditioners--and the gas-fired electricity that powers them.
Temperatures that had been expected to reach as high as 8-degrees-Farenheit
above normal in parts of the south are now getting pushed out as a cool front
from Canada sweeps through the Midwest and Mid-Atlantic regions.

  Traders are also expecting the storage update Thursday from the federal
government to show producers maintained their record pace for stockpile
additions. Producers likely added 84 billion cubic feet to storage last week,
75% more than the average addition for that week, according to the average
forecast of 18 analysts, brokers and traders surveyed by The Wall Street
Journal.

  Gas prices had already dropped about 20% between June and July as that record
growth for surpluses picked up. Since then, cheap gas has drawn more buyers
from the power sector, holding the price in check. Gas has now traded between
$3.724/mmBtu and $4.01/mmBtu since July 18.

  "It's just the reality we have for the next month and a half, probably two
months," said Kyle Cooper, managing director of research at IAF Advisors, a
Houston consulting firm. "As we get into mid-October, you could introduce some
early-season heating demand, and that'll get the market going one way or the
other."

FUTURES            SETTLEMENT         NET CHANGE
Nymex September    $3.823             -5.4c
Nymex October      $3.86              -4.8c
Nymex November     $3.933             -4.4c

CASH HUB          RANGE              PREVIOUS DAY
El Paso Perm      $3.82-$3.86        $3.80-$3.885
El Paso SJ        $3.84-$3.87        $3.85-$3.9125
Henry Hub         $3.83-$3.875       $3.825-$3.885
Katy              $3.89-$3.92        $3.90-$3.945
SoCal             $4.02-$4.26        $4.05-$4.26
Tex East M3       $2.30-$2.415       $2.55-$2.695
Transco 65        $3.82-$3.8975      $3.86-$3.925
Transco Z6        $2.30-$2.40        $2.53-$2.63
Waha              $3.82-$3.83        $3.83-$3.86


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


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  (END) Dow Jones Newswires

  August 20, 2014 15:01 ET (19:01 GMT)

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082014 19:01 -- GMT
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