Dow Jones - End of Day Natural Gas Commentary

DJ Natural Gas Futures Climb Despite Tepid Outlook

  By Christian Berthelsen

  Natural gas futures rallied Monday on what analysts said were technical drivers and traders closing out bearish bets
as prices rose. But futures remained well within the price range that has dominated for months amid mild
weather-related demand and robust supply growth.

  Front-month November natural gas futures settled up 5.7 cents or 1.5% at $3.916 a million British thermal units on
the New York Mercantile Exchange. Prices were choppy early in the session but turned positive mid-morning and rallied
into the close.

  Analysts attributed the gains to the market remaining aloft after testing levels where it continued falling before.
But the market remained well within the range that has prevailed since mid-summer, and analysts said there appeared to
be little in the way of catalysts for it to break out of its recent pattern in the foreseeable future.

  "We're not going anywhere, just waiting for winter to come and watching short-term fluctuations," Price Futures Group
executive Phil Flynn said.

  Weather forecasts are calling for neutral to above-normal temperatures over much of the U.S. through late October, in
a delayed onset to heating season that is expected to crimp demand and allow for additional gas to be added to stored
supplies for winter. That outlook remained in place throughout the session, though a Midwest storm is expected to move
east in the coming days, with showers and thunderstorms bringing temperatures slightly cooler.

  Robust domestic gas production has helped refill inventories severely depleted by the harsh winter, with many
analysts now estimating the U.S. will have about 3.5 trillion cubic feet of gas in storage by the start of winter
heating season -- not as much as last year, but adequate for the coming heating season. Inventories stood at 3.2
trillion cubic feet last week, 10.5% below average, but with at least three more additions to storage expected in the
coming weeks.

  Morgan Stanley said in a note that mild weather and a big production drive could extend the stockpiling season into
mid- or late-November, one to two weeks beyond normal.

  FUTURES SETTLEMENT NET CHANGE

  Nymex November $3.916 +5.7c

  Nymex December $4.004 +5.5c

  Nymex January $4.080 +4.5c

  CASH HUB RANGE PREVIOUS DAY

  El Paso Perm $3.72-$3.80 $3.60 -$3.685

  El Paso SJ $3.725-$3.765 $3.665 -$3.70

  Henry Hub $3.855-$3.88 $3.84-$3.875

  Katy $3.75-$3.79 $3.75-$3.83

  SoCal $3.93-$4.045 $3.80-$3.86

  Tex East M3 $1.90-$2.03 $1.30-$1.55

  Transco 65 $3.81-$3.84 $3.79-$3.82

  Transco Z6 $1.98-$2.085 $1.30-$1.54

  Waha $3.71-$3.71 $3.69 -$3.745

  Write to Christian Berthelsen at christian.berthelsen@wsj.com

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  (END) Dow Jones Newswires

  October 13, 2014 15:27 ET (19:27 GMT)

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

101314 19:27 -- GMT
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