DJ Natural Gas Futures Extend Slide as Traders Take Profits on Warming Trend
By Christian Berthelsen
Natural gas futures extended their selloff for a second day Tuesday as forecasts for severe cold in the coming
weeks began to moderate, and traders took the opportunity to lock in profits from the recent market surge.
Natural gas for December delivery fell 3 cents, or 0.7%, to $4.2250 a million British thermal units on the New
York Mercantile Exchange, poised for a second-straight day of declines after running up more than 23% over nine
previous sessions. Analysts said the rally appeared overdone and was poised to normalize.
The market has soared in recent weeks as the first strong burst of winter-like weather has appeared, with a swath
of frigid temperatures appearing over the Plains and Midwestern states and extending as far south as Texas in the
coming days that is expected to drive demand for gas-fired heating. But prior forecasts for that weather to last into
late November are softening, with temperatures bouncing back from lows.
"Natural gas is charging lower once again, as the diminishing likelihood of another Ice Age is unwound from
prices," analyst Matt Smith of consultancy Schneider Electric said in a note.
Producers and utilities have rebuilt gas stockpiles that were depleted by last year's severe winter, with the
amount of gas in storage now standing at nearly 3.6 trillion cubic feet--a level analysts say should be adequate to get
through the coming fall and winter heating season, though it remains slightly below year-ago and average levels.
Analysts are expecting another large addition to stored supplies in U.S. data to be released later this week,
though it may be the last of the season, with this week's cold front expected to begin driving heating demand. The U.S.
Energy Information Administration will release its weekly storage data on Friday instead of Thursday, delayed by the
Veterans Day holiday.
In the cash market, prices for next-day delivery of physical gas at the U.S. benchmark Henry Hub in Louisiana last
traded at $4.08 a million Btus, within Monday's range of $4.065-$4.25. Prices at the Transco Z6 hub in New York last
traded at $3.73 a million Btus, above Monday's range of $3.49-$3.65.
Write to Christian Berthelsen at christian.berthelsen@wsj.com
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(END) Dow Jones Newswires
November 11, 2014 09:59 ET (14:59 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
111114 14:59 -- GMT
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