DJ Natural Gas Slides on Warmer Forecasts
By Nicole Friedman and Timothy Puko
NEW YORK--Natural gas futures retreated for a third straight session Wednesday amid forecasts that a widespread cold
snap will start to dissipate in about two weeks.
Natural gas for December delivery fell 6.2 cents, or 1.5%, to $4.185 a million British thermal units on the New York
Mercantile Exchange.
Prices soared more than 20% by early November on expectations that a strong burst of winter-like weather would drive
demand. About half of all U.S. households use natural gas as their primary heating fuel.
But without a more sustained cold spell to drive heating demand, traders have to pull back, analysts said.
"There are some signs that the large-scale pattern responsible for the ongoing and expected Arctic cold may break
down or at least temporarily relax" in the next 11 to 15 days, forecasting firm WSI Corp. said in a note Wednesday.
That has made this week a good time for bulls to sell and close out their profitable bets, said Gene McGillian,
senior analyst at Tradition Energy. Record production has kept the market well supplied. It would take an extended cold
snap in December--when whole days of subfreezing temperatures can create peak demand for home heating--for prices to
push up to $5/mmBtu, he said.
"If you get normal weather, the market is going to be free to float around between $4 to $4.50," Mr. McGillian said.
Traders are also waiting on weekly inventory data from the U.S. Energy Information Administration, which has been
delayed to Friday due to the Veterans Day holiday.
Producers have injected record amounts of fuel into storage this spring and summer, as production has soared.
This week's storage report "is a reminder that weather has to be extreme in order to counteract the underlying
fundamental picture," said Aaron Calder, analyst at Gelber & Associates, in a note. "The over-arching reason that
injections outpaced average week after week [this summer] was the oversupply inherent in the market."
The EIA, in its monthly short-term energy outlook released Wednesday, called for the spot price of natural gas to
average $3.97 a million British thermal units this winter, down from last month's estimate of $4/mmBtu. Last winter,
spot prices averaged $4.53/mmBtu, the agency said.
The EIA also lowered its price forecast for 2015 from $3.84/mmBtu to $3.83/mmBtu.
FUTURES SETTLEMENT NET CHANGE
Nymex December $4.185 -6.2c
Nymex January $4.284 -6.0c
Nymex February $4.252 -5.3c
CASH HUB RANGE PREVIOUS DAY
El Paso Perm $4.15-$4.2275 $4.07-$4.15
El Paso SJ $4.18-4.22 $4.0750-4.14
Henry Hub $4.17-$4.25 $4.02-$4.16
Katy $4.10-$4.20 $4.05-$4.135
SoCal $4.30-$4.40 $4.26-$4.35
Tex East M3 $3.76-$4.31 $3.65-$3.79
Transco 65 $4.20-$4.23 $4.04-$4.14
Transco Z6 $3.80-$4.12 $3.67-$3.79
Waha $4.18-$4.24 $4.05-$4.13
Write to Nicole Friedman at nicole.friedman@wsj.com and 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
November 12, 2014 15:41 ET (20:41 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
111214 20:41 -- GMT
------
No comments:
Post a Comment