Dow Jones - Morning Natural Gas Commentary

DJ Natural-Gas Rises as Traders Position Themselves for Stockpile Update


  By Timothy Puko


  NEW YORK--Natural-gas prices rose on Thursday as traders positioned
themselves ahead of a weekly update on stockpiles.

  Natural gas for September delivery was up 5.3 cents, or 1.4%, at $3.876 a
million British thermal units on the New York Mercantile Exchange. The price is
in the middle of a 29-cent trading range that gas has stayed in for the past
month.

  The U.S. Energy Information Administration will give its weekly update on
natural gas storage at 10:30 a.m. ET, and many traders will make small moves to
lock in positions ahead of that news, analysts said.

  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.

  Some may be expecting a number lower than the survey consensus, so they are
buying in anticipation of higher prices, Teri Viswanath, a strategist at BNP
Paribas SA in New York, said in a note.

  Some short-sellers, traders who bet prices would fall, likely took advantage
of the prior session's losses to buy back in and close out those bets before
the survey could affect the market, Dominick Chirichella, analyst at the Energy
Management Institute.

  Record supply already pushed prices down by 20% at the start of the summer.
But power plants have stopped to buy the lower-priced gas to make electricity,
supporting prices. Gas has now traded between $3.724/mmBtu and $4.01/mmBtu
since July 18.

  "Right now, I don't expect much to change that," said Frank Clements,
co-owner of Meridian Energy Brokers Inc. "I think we're pretty fairly priced."

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded
at $3.86/mmBtu, compared with Wednesday's range of $3.83-$3.875. Cash prices at
the Transco Z6 hub in New York traded in a bid-ask range of $2.20/mmBtu to
$2.50/mmBtu, compared with Wednesday's range of $2.30 to $2.40.


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


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  (END) Dow Jones Newswires

  August 21, 2014 09:31 ET (13:31 GMT)

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082114 13:31 -- GMT
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