Dow Jones - End of Day Natural Gas Commentary

DJ Natural Gas Bounces Higher with Winter on the Way -- Update

  By Timothy Puko

  NEW YORK--Natural-gas prices climbed Tuesday as traders pounced on a chance to buy the fuel cheaply ahead of the peak
winter demand season.

  The front-month November contract settled up 5.9 cents, or 1.5%, at $3.957 a million British thermal units on the New
York Mercantile Exchange.

  The gains came a day after natural gas had its biggest losses in a month. Many traders are still anticipating big
price spikes as the peak season for home heating gets closer, and they are jumping in whenever prices slide, brokers
said. Natural gas is used to heat about half of homes in the U.S.

  Prices should stay near $4/mmBtu through November but then will rise for the winter, the U.S. Energy Information
Administration said Tuesday in its Short-Term Energy Outlook.

  "I still think people are looking to buy the dips in this market just in case we get this early winter rally," said
Frank Clements, co-owner of Meridian Energy Brokers Inc. outside New York. "This is as good a time to buy it as any,
right now."

  Concerns about U.S. gas supplies have eased. At the end of last winter, the amount of gas in storage was the lowest
in more than a decade, and investors were worried that a hot summer could leave the U.S. ill-prepared for the next cold
season.

  Instead, the summer was mild, and producers have been rebuilding their gas stockpiles.

  On Tuesday, the EIA said it has raised its expectations for gas stockpiles to total 3.53 trillion cubic feet by Nov.
1. While that's still 8% below last year's Nov. 1 level, the EIA expects an extra 3.5 billion cubic feet a day of gas
production to help cover any shortfall.

  The strong supply will keep natural gas prices at about $4.12 a thousand cubic feet from October through March, down
about 1.7% from what the agency forecast a month ago. EIA also lowered its price forecast for 2015 by 1% to $3.95/mcf.
FUTURES         SETTLEMENT   NET CHANGE
Nymex November   $3.905        5.9c
Nymex December   $4.052        6.5c
Nymex January    $4.134        7c
CASH HUB         RANGE          PREVIOUS DAY
El Paso Perm  $3.75-$3.85      $3.71-$3.83
El Paso SJ    $3.75 -$3. 80         $3.745-$3.76
Henry Hub     $3.845-$3.945        $3.8725-$3.9275
Katy          $3.86-$3.91        $3.86-$3.91
SoCal         $3.94-$4.08      $3.93-$4.06
Tex East M3   $1.75-$1.95       $1.78-$1.90
Transco 65    $3.815-$3.90   $3.815-$3.8525
Transco Z6    $1.80-$1.98       $1.8325-$1.875
Waha          $3.81-$3.875       $3.80-$3.87

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

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  October 07, 2014 16:50 ET (20:50 GMT)

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100714 20:50 -- GMT
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