Dow Jones - Post-Report Commentary

DJ Natural-Gas Futures Jump After Stockpile Increase Misses Projections

   By Christian Berthelsen


  Natural-gas prices shook off early-session losses and jumped higher Thursday after weekly U.S. data showed
inventories increased less than expected.

  Futures traded as low as $3.815 a million British thermal units early in the session, but gained as much as 2.2%
above that level after the data release.

  Though the inventory data missed expectations by only a small amount, one analyst said the market reaction was likely
due to traders quickly closing out bearish bets that prices would fall, and that market fundamentals remain weak.

  "The number was smaller than expected, and some of the shorts decided to cover a little," said Gene McGillian, an
analyst with wholesale brokerage Tradition Energy. "If we don't get a change in the forecast, we are going to see lows
tested eventually."

  The report showed inventories in the week ended Oct. 3 rose 105 billion cubic feet, compared with analyst
expectations of 108 billion cubic feet. Total stockpiles reached 3.205 trillion cubic feet, 10.5% below average for
this time of year.

  Producers and utilities are racing to replenish supplies before the start of heating season next month after they
were severely depleted last winter, but analysts say a robust production season and mild weather should allow for
inventories to adequately recover.

  Mild weather during the so-called shoulder season between summer air-conditioning and fall and winter heating has
added to the growing supplies, as gas demand has been weak. Those conditions are expected to continue through
mid-October, with forecasters predicting above-normal temperatures for this time of year that will continue to keep
gas-fired heating demand at bay.

  "There is just not enough heating or cooling-related demand," analyst Dominick Chirichella of the Energy Management
Institute said in a note. "Supply continues at robust levels."

  Natural gas for November delivery recently traded at $3.895 a million British thermal units, up 4.1 cents or 1.1%.

  In the physical market, cash prices for next-day delivery of natural gas at the benchmark Henry Hub in Louisiana last
traded at $3.8725 a million Btus, within Wednesday's range of $3.86-$3.91. There were no bids or offers for next-day
gas at the Transco Z6 hub in New York, according to ICE.


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


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  (END) Dow Jones Newswires

  October 09, 2014 11:14 ET (15:14 GMT)

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

100914 15:14 -- GMT
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