Dow Jones - Morning Natural Gas Commentary

DJ Natural-Gas Price Rise Likely Coming From Technical Traders


   By Timothy Puko


  NEW YORK--Natural-gas prices are bouncing back from a week of losses, surprising analysts who believe this could just
be a temporary boost from technical traders.

  Natural gas for October delivery is up 2.8 cents, or 0.7%, at $3.821 a million British thermal units on the New York
Mercantile Exchange. The move erases Friday's losses and breaks a losing streak that had brought the gas market's worst
week since February.

  The move was likely just from technical traders responding to those losses, said Gene McGillian, a broker and analyst
at Tradition Energy. Electronic trading programs often buy automatically after losses like last week's and there was
little evidence to suggest more substantive reasons for buying, he added.

  "You're going to get people who probably come in here, throw a couple dollars at it, if it holds, throw a few more
dollars at it," said Stephen Schork, editor of energy trade publication The Schork Report. "That's how you get a
dead-cat bounce."

  Weather forecasts are still showing flashes of both unseasonably cool and hot weather in the coming two weeks.
Neither are really enough to drive a demand for home heating or gas-fired power to run air conditioners, analysts and
meteorologists have said.

  Without any sign of an increase in demand, record gas production from the country's shale drilling boom has been
pushing the market lower since mid-June.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.85/mmBtu, compared with Friday's
range of $3.78-$3.86. Cash prices at the Transco Z6 hub in New York last traded at $2.57/mmBtu, compared with Friday's
range of $1.98 to $2.30.


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


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  (END) Dow Jones Newswires

  September 08, 2014 09:56 ET (13:56 GMT)

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