Dow Jones - Morning Natural Gas Commentary

DJ Natural Gas Slips Ahead of Inventory Report


   By Nicole Friedman


  NEW YORK--Natural gas slipped early Thursday ahead of weekly inventory data expected to show a larger-than-average
build in supplies.

  Natural gas for October delivery recently fell 4.8 cents, or 1.2%, to $3.863 a million British thermal units on the
New York Mercantile Exchange.

  Though natural-gas supplies were largely depleted by record demand for the heating fuel last winter, inventories have
rebuilt unusually quickly this spring and summer. Production has been higher than expected, and mild weather has kept
demand low for gas-powered electric air-conditioning.

  As of Sept. 12, natural-gas supplies stood at 2.891 trillion cubic feet, 13% below the five-year average for the
week, according to the U.S. Energy Information Administration.

  The EIA is scheduled to release its storage data for the week ended Sept. 19 at 10:30 a.m. ET.

  Analysts and traders expect the report to show that natural-gas stockpiles grew by 92 billion cubic feet, according
to a Wall Street Journal survey.

  If the storage estimate is correct, inventories as of Sept. 19 would total 2.982 trillion cubic feet, 12% below the
year-before level and 13% below the five-year average for the same week.

  "The market remains very comfortable with the rate of injections so far this year," Dominick Chirichella, analyst at
the Energy Management Institute, said in a note.

  However, stockpiles will still be below average levels by the start of the winter heating season,  Teri Viswanath,
director of commodity strategy for natural gas at BNP Paribas SA, said in a note.

  "We suspect that these supply concerns will likely push prices above the very narrow $3.75 to $4.00/MMBtu range...as
traders look beyond the injection season to the winter ahead," she said.

  Futures trading could see additional volatility Thursday because the October natural-gas options contract expires
with the session's settlement, Ms. Viswanath said, and the futures contract expires Friday.

  Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $3.89/mmBtu, according
to Intercontinental Exchange Inc., versus Wednesday's average of $3.8422/mmBtu.

  Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded between $1.60 and $2.05/mmBtu,
compared with $1.8563/mmBtu Wednesday.


  Write to Nicole Friedman at nicole.friedman@wsj.com


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  (END) Dow Jones Newswires

  September 25, 2014 09:15 ET (13:15 GMT)

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

092514 13:15 -- GMT
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