DJ Natural-Gas Prices Drop on Suspect Demand
By Timothy Puko
NEW YORK--Natural-gas prices gave back three sessions of gains as signs grow
that next week's heat wave will be short-lived.
Natural gas for September delivery is down 8.1 cents, or 2%, at $3.894 a
million British thermal units on the New York Mercantile Exchange. Natural gas
hasn't had a 2% drop since July 22 as a slow-advancing rally had halted large
losses from earlier in the summer.
Weather forecasts are showing more confidence that a cooling front will come
down from Canada, limiting a heat wave hitting most of the country next week.
Heat causes people to turn on air conditioning and use more gas-fired
electricity, and with the peak season for that demand nearly over, it would
take a heat wave with a lot more staying power to get buyers into the market,
analysts said.
"A little bit of demand isn't enough to absorb this onslaught of gas that's
coming on," said Gene McGillian, a broker and analyst at Tradition Energy.
"When we didn't see any buying showing up overnight, all of a sudden (traders)
started pushing lower."
Unconventional gas from the Marcellus shale and increased drilling in Texas
are leading record production, likely to increase 5.3% from last year, the
Energy Information Administration said Tuesday. Its monthly Short-term Energy
Outlook forecast annual growth to continue at 2.1% next year and a
corresponding price drop for both years.
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.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded
at $3.88/mmBtu, compared with Tuesday's range of $3.9025-$3.96. Cash prices at
the Transco Z6 hub in New York traded in a bid-ask range of $2.43/mmBtu to
$2.60/mmBtu, compared with Tuesday's range of $2.50 to $2.65.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
August 13, 2014 09:41 ET (13:41 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
081314 13:41 -- GMT
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