Dow Jones - Natural Gas Down on Weakening Demand

DJ Natural-Gas Prices Slide as Summer Demand Fades

  By Christian Berthelsen

  Natural-gas prices dropped Friday as weather forecasts turned cooler through
the end of August, likely bringing the summer-demand season to a close on a
weak note.

  Natural gas for September delivery fell 12 cents, or 3.1%, to $3.786 a
million British thermal units on the New York Mercantile Exchange, wiping out
Thursday's jump after weekly inventory data showed smaller-than-expected gains
in stockpiles.

  New weather forecasts Friday projected a cooling trend over the next two
weeks, with what had been expected to be mild heat over the East Coast
dissipating and a blast of cool Canadian air moving down over northern Midwest
states. As a result, meteorologists predicted "very limited heat" and reduced
demand for gas-fired electricity to power air conditioning, Commodity Weather
Group said in a note.

  Brokers and analysts said the selloff showed there is little conviction
behind recent gains in the market, as even bullish traders see overall weak
supply and demand fundamentals.

  "If the weather's even a little bit milder, it takes the one factor that
might've been supportive out of the picture," said Tradition Energy broker Gene
McGillian.

  If the forecasts hold up, it would cap a mild summer that has crimped
natural-gas demand, at a time when gas production has been robust and utilities
have been aggressively restocking inventories depleted by a severe winter.
Though last week's inventory gains were smaller than expected, they were 70%
higher than average, and the U.S. is on track to have adequate supplies when
heating season begins in the fall.

  In the physical market, cash prices for next-day delivery at the benchmark
Henry Hub in Louisiana last traded at $3.78 a million British thermal units,
down from Thursday's range of $3.81-$3.90/mmBtu. Prices at the Transco Z6 hub
in New York traded in a bid-offer range of $2.15-$2.45, compared with
Thursday's range of $2.35-$2.41.

  Write to Christian Berthelsen at Christian.Berthelsen@wsj.com

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  (END) Dow Jones Newswires

  August 15, 2014 09:17 ET (13:17 GMT)

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

081514 13:17 -- GMT