Dow Jones - Morning Natural Gas Commentary

DJ Natural Gas Flip-Flopping on Mixed Signals



  By Timothy Puko


  NEW YORK--Natural-gas prices are rising slightly Tuesday as mixed weather
forecasts, contract expiration and a looming holiday are creating a quickly
changing market.

  Natural gas for September delivery is up 1.1 cents, or 0.3%, at $3.948 a
million British thermal units on the New York Mercantile Exchange. The more
heavily traded October contract is up 1 cent, or 0.3%, to $3.989/mmBtu.
September options expire Tuesday and the contract expires Wednesday.

  Both contracts flip-flopped around unchanged to start the day. After the
trading floor opened, the September contract briefly surpassed the market's
highest closing price in a month, and then started back down toward unchanged.

  A mixed batch of weather updates leaned toward hotter forecasts for early
September. But traders are also looking at short-term forecasts that show cool
weather coming soon, said Frank Clements, co-owner of Meridian Energy Brokers
Inc. outside New York. Gas demand and price in the summer are largely dependent
on how much people use their air conditioners, which consume large amounts of
gas-fired electricity.

  The options expiration also adds an element of unpredictability, as several
traders are likely to ignore larger market forces in order to position their
trades for the expiration, analysts said. That uncertainty, combined with the
mixed weather forecasts and the coming three-day Labor Day weekend, is likely
to keep changes limited Tuesday, regardless of what direction the market
ultimately takes, analysts said.

  "No one's really willing to stick their neck out right now," Mr. Clements
said.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded
at $3.97/mmBtu, compared with Monday's range of $3.89-$4.00. Cash prices at the
Transco Z6 hub in New York last traded at $2.915/mmBtu, compared with Monday's
range of $2.50 to $2.78.


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


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  (END) Dow Jones Newswires

  August 26, 2014 09:39 ET (13:39 GMT)

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

082614 13:39 -- GMT
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