Dow Jones - Morning Natural Gas Commentary

DJ Natural-Gas Rally Gets a Boost from Warming Weather Forecasts


   By Timothy Puko


  NEW YORK--Natural-gas prices are resuming their week-long rally Monday as
weather updates warmed over the weekend, signaling the potential for an uptick
in demand.

  Natural gas for September delivery is up 8.4 cents, or 2.2%, at $3.924 a
million British thermal units on the New York Mercantile Exchange. Trading for
the October contract has now surpassed trading for the September contract.
September options expire Tuesday and the contract expires Wednesday. The
October contract rose 8.1 cents, or 2.1%, to $3.964/mmBtu.

  The front-month contract has gained 5.3% in a week since intraday trading on
Aug. 18 dipped to nearly a nine-month low. That rally has brought gas back to
the middle of a 30-cent range it has traded within for more than a month.

  Monday's lift was primarily from the weather, analysts said. Weather Services
International in Andover, Mass., issued a heat alert for a swath of the country
spanning from West Texas to Detroit and Cleveland. Summer heat makes it more
likely people will use their air conditioners, consuming more gas
fired-electricity.

  Forecasters said that heat is likely to stick around, too, with predictions
for September to start warmer than expected. Except for the Rocky Mountain
region, the entire country is likely to see temperatures from 2- to
8-degrees-Farenheit above normal through Sept. 8, according to MDA Weather
Services.

  "The forecasts look more bullish this morning than they did Friday, so we're
pushing things up almost entirely in response to the weekend update," said Jim
Ritterbusch, president of energy-advisory firm Ritterbusch & Associates.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded
at $3.91/mmBtu, compared with Friday's range of $3.83-$3.92. Cash prices at the
Transco Z6 hub in New York traded in a bid-ask range of $2.50/mmBtu to
$2.80/mmBtu, compared with Friday's range of $1.80 to $1.93.


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


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  (END) Dow Jones Newswires

  August 25, 2014 09:39 ET (13:39 GMT)

  Copyright (c) 2014 Dow Jones & Company, Inc.

082514 13:39 -- GMT
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