DJ Natural Gas Rising Again as Weather Forecasts Show More Heat Coming
By Timothy Puko
NEW YORK--Natural-gas prices closed barely higher Tuesday, with traders
continuing their tenuous push as forecasts show a heat wave on the way.
The front-month September contract settled up 0.9 cent, or 0.2%, at $3.974 a
million British thermal units on the New York Mercantile Exchange. It narrowly
advanced a three-week high set Monday and was the market's sixth gain in seven
sessions. Only two of those gains have been larger than 1%.
Several forecasts grew notably warmer Tuesday, causing the early buying,
analysts said. Heat causes people to turn on air conditioning and use more
gas-fired electricity, and the pattern developing for the weekend includes some
of the strongest heat in what has been a mild season. Above-normal temperatures
should cover nearly all of the country by Monday, according to MDA Weather
Services.
The rally hasn't been stronger because traders aren't certain any demand
increase has staying power, analysts said. The peak season for summer demand is
nearly past, and there are signs that unseasonably cool weather could return
late next week, limiting any demand spike. There are also signs the buying is
from technical traders or short sellers--traders who bet prices would
fall--buying back in to close out their past bets, analysts said.
The record pace of production already dropped gas prices about 20% between
mid-June and mid-July, and government forecasters said Tuesday that trend is
likely to continue. Unconventional gas from the Marcellus shale and increased
drilling in Texas are leading record production, likely to increase 5.3% from
last year, according to the Energy Information Administration's monthly
Short-term Energy Outlook. It expects annual growth to continue at 2.1% next
year.
The agency dropped its price projections accordingly. It expects 2014 prices
to average $4.46/mmBtu, down 6.5% from its July forecast. It dropped its 2015
projection to $4.00/mmBtu, down 11% from what it forecast a month ago.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
August 12, 2014 14:54 ET (18:54 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
081214 18:54 -- GMT
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