Dow Jones - Natural Gas Morning Commentary

DJ Natural Gas Rising on Warming Weather


   By Timothy Puko


  NEW YORK--Natural-gas prices are rising slightly Wednesday as summer heat
both this week and next have traders expecting an increase in demand.

  Natural gas for September delivery is up 5.9 cents, or 1.5%, at $3.970 a
million British thermal units on the New York Mercantile Exchange. The more
actively traded October contract crested over $4 for the second straight
session, recently trading is up 5.9 cents, or 1.5%, to $4.008/mmBtu. The
September contract expires at close.

  Weather Services International in Andover, Mass., issued a heat alert for the
lower Midwest and the southern plains. Excessive heat and humidity could last
two to three days, pushing into the 90 degrees Fahrenheit range in cities
including St. Louis and Oklahoma City, it said.

  That kind of heat will likely spread next week, according to MDA Weather
Services. About half the country, from West Texas to Upstate New York, could
see temperatures as much as five-degrees-Fahrenheit above normal, it said.

  Summer heat makes it more likely people will use their air conditioners,
consuming more gas-fired electricity. And the near-term heat has led to strong
spot trading, boosting prices on the futures curve, Jim Ritterbusch, president
of energy-advisory firm Ritterbusch & Associates said in a note.

  The heat, however, probably isn't severe enough to lead to any massive price
gains, analysts and traders said. Several expect incremental gains with prices
narrowly over $4/mmBtu. Record domestic gas production has led to a record pace
for rebuilding the nation's stockpile, and it is too late in the season for a
few weeks of above-average temperatures to get people fearful of a shortage
going into the winter, traders said.

  "If this is something that was really moving things, we would have burst
through $4," said John Woods, president of JJ Woods Associates and a Nymex
floor trader. "People accept that there's a rally, but they're picking their
spots."

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded
at $4.00/mmBtu, compared with Tuesday's range of $3.915-$3.98. Cash prices at
the Transco Z6 hub in New York traded in a bid-ask range of $2.58/mmBtu to
$2.75/mmBtu, compared with Tuesday's range of $2.85 to $2.95.


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


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  (END) Dow Jones Newswires

  August 27, 2014 09:49 ET (13:49 GMT)

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

082714 13:49 -- GMT
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