DJ Natural-Gas Prices End Higher
By Timothy Puko
Natural-gas prices closed higher Thursday, rebounding in the afternoon
despite a stockpile update that showed a larger surplus than expected.
The front-month September contract settled up 6.6 cents, or 1.7%, to $3.889 a
million British thermal units on the New York Mercantile Exchange. Prices fell
1.9% immediately after the weekly stockpile update at 10:30 a.m., but then
steadily rose through the afternoon to close at their highest point in a week.
Traders and analysts had trouble explaining the turn. It could have been
because of heat that is peaking in the Midwest and South this week, Jim
Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, said
in a note. But the most recent updates had pointed to cooler weather,
suggesting that there would not be a lingering demand spike for gas-fueled
power to run air conditioners.
"It's very hard to figure out right now," said Scott Gettleman, an
independent trader in New York. "The market is schizophrenic."
Mr. Gettleman and other traders had expected prices to keep dropping after
the U.S. Energy Information Administration's weekly storage report. It showed
an 88-billion-cubic-feet addition to natural-gas storage for the week ended
Aug. 15, tying a record high for the second week of August. It was also 4 bcf
larger than what analysts had expected.
Traders use the EIA update to gauge how quickly stockpiles are recovering
from high demand that drained them to 11-year lows this winter. Last week's
addition refilled stockpiles to 2.6 trillion cubic feet, nearly within 17% of
the five-year average level for that week of the year. A record pace for
storage additions has closed a gap that was larger than 50% at the start of the
spring.
That pace also led to a 20% drop in prices earlier this summer, but those
losses have stopped in recent weeks. Power plants likely jumped in to buy the
fuel at lower prices, analysts have said. That has kept prices range-bound and
Thursday afternoon's rally put the market back in the middle of a 29-cent
trading range it has been stuck in for the past month.
"Right now, I don't expect much to change that," said Frank Clements,
co-owner of Meridian Energy Brokers Inc. outside New York. "I think we're
pretty fairly priced."
-- Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
August 21, 2014 15:54 ET (19:54 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
082114 19:54 -- GMT
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