Dow Jones - Post Report Natural Gas Commentary

DJ Natural-Gas Prices Rise on Smaller-Than-Expected Surplus



  By Timothy Puko


  NEW YORK-- Natural-gas futures are inching up Thursday after a weekly stockpile report showed a smaller surplus than
expected.

  Producers added 75 billion cubic feet of gas to storage for the week ended Aug. 22, the U.S. Energy Information
Administration said. The addition was 2 bcf smaller than the 77 bcf consensus average expectations of by analysts and
brokers in The Wall Street Journal survey.

  Natural gas for August delivery immediately added 1.8% after the data release, on top of gains from early-morning
trading. The market pulled back nearly all of that spike, but is still rising on the day, recently trading up 6 cents,
or 1.5%, to $4.063 a million British thermal units on the New York Mercantile Exchange.

  Traders use the EIA update to gauge how quickly stockpiles are recovering from high demand that drained them to
11-year lows this past winter. Last week's addition refilled stockpiles to 2.6 trillion cubic feet, within 17% of the
five-year average level for that week of the year. It had been at less than half of the average at the start of spring.

  The addition wasn't far enough off of the expectation to create a major move, said Aaron Calder, senior market
analyst at energy-consulting firm Gelber & Associates in Houston. It also fits with the recent trend in prices, leaving
little leeway to go higher, he added.

  Gas is up 7.1% since Aug. 18. A lot of that rise has come from late-arriving heat, meaning people are likely to use
their air conditioners more, consuming more gas-fired electricity. But the price has also got a boost after the
September contract expired Wednesday and front-month trading moved to the more expensive October contract.

  "It just seemed like the market was a little tuckered (Thursday) after it's been kind of bouncing," Mr. Calder said.
"I think we'll have to spend some time here before we move further."


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


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  (END) Dow Jones Newswires

  August 28, 2014 11:03 ET (15:03 GMT)

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