DJ Natural-Gas Prices Fall on Larger-than-Expected Surplus
By Timothy Puko
NEW YORK--Natural-gas futures slipped Thursday after a weekly stockpile report showed a larger surplus than expected.
Producers added 79 billion cubic feet of gas to storage for the week ended Aug. 29, the U.S. Energy Information
Administration said. The addition was 6 bcf larger than the 73 bcf consensus average expectations of analysts and
brokers in The Wall Street Journal survey.
Natural gas for October delivery immediately lost 1.9% after the data release, undoing small gains from early-morning
trading. The front-month contract recently traded down 3.4 cents, or 0.9%, for the day at $3.813 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 winter. Last week's addition refilled stockpiles to 2.7 trillion cubic feet, within 16% 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.
"It ... suggests a weakening of the background supply/demand balance, possibly related to a further increase in
production, with bearish implications for the weeks to follow," Tim Evans, analyst at Citi Futures Perspective in New
York, said in a note.
Traders have already been pulling back, taking more than 5% out of the market this week after the market briefly
peaked above $4 to end last week. Record supply has overwhelmed tepid demand as mild weather has kept air conditioners
off and demand for gas-fired power unseasonably low.
That dynamic has allowed producers to refill stockpiles at a record rate this summer, with little sign of slowing
down. Last week's addition was 40% larger than the five-year average surplus for that week, according to EIA data. It
has said additions need to outpace the average by 30% every week to refill stockpiles adequately for the winter.
"People got kind of shaken up by the drop on Tuesday," said Frank Clements, co-owner of Meridian Energy Brokers Inc.
outside New York. "People are thinking maybe they'll take their lumps now and get back in again later."
Write to Timothy Puko at tim.puko@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
September 04, 2014 11:05 ET (15:05 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
090414 15:05 -- GMT
No comments:
Post a Comment