DJ Natural-Gas Dips to Biggest Losses in a Month
By Timothy Puko
NEW YORK--Natural gas briefly sank to its lowest level in a month as forecasts for warmer weather point to lower
expectations for heating demand.
Natural gas for November delivery is down 12 cents, or 3%, at $3.919 a million British thermal units on the New
York Mercantile Exchange. The market had traded as low as $3.891, with losses larger than any session dating back to
Sept. 11, which brought a 3.3% loss. The retreat puts natural gas back in the middle of the $3.80/mmBtu to $4/mmBtu
trading range, where it has spent most of the past two months.
Record production from the unconventional drilling boom keeps capping the market at around $4/mmBtu, where trading
closed on Friday. Some traders have briefly pushed gas beyond that point several times since August, in anticipation of
peak winter demand season when extreme weather can lead to price spikes. Without any sign of cold weather, strong
production has kept them from sustaining those prices.
Several forecasts are showing more temperate conditions than they did last week, suggesting lower than expected
demand on the way both for gas heating and for gas-fired power to run air conditioners, analysts said. A cold front
that was supposed to spread over large parts of the Midwest starting this weekend is giving way to normal October
temperatures, according to MDA Weather Services and Commodity Weather Group LLC.
"If we want to see $4 or above, you're going to need some cool weather with deviations from the normal much
stronger than what we're seeing," said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.88/mmBtu, compared with
Friday's range of $3.89-$3.98. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of
$1.72-$1.95/mmBtu, compared with Friday's range of $1.10 to $1.55.
Write to Timothy Puko at timothy.puko@wsj.com
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(END) Dow Jones Newswires
October 06, 2014 09:55 ET (13:55 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
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