DJ Natural Gas Futures Keep Dropping as Weather Forecast Warms
By Timothy Puko
Natural gas futures extended their retreat to a third session Wednesday as forecasts show a widespread cold snap
starting to dissipate in about two weeks.
Natural gas for December delivery fell 7.1 cents, or 1.7%, to $4.176 a million British thermal units on the New York
Mercantile Exchange. Without an even more sustained cold spell to drive heating demand, traders have to pull back from
a rally that raised prices more than 20% to start November, analysts said.
"Colder than normal [temperatures] this time of the year are not nearly as strong as colder than normal temperatures
hitting during the heart of the winter heating season," Dominick Chirichella, analyst at the Energy Management
Institute, said in a note.
The market had soared as the first strong burst of winter-like weather showed up in November forecasts, with a swath
of frigid temperatures appearing over the Plains and Midwestern states and extending as far south as Texas. But prior
forecasts for that weather to last into late November are softening.
That made has made this week a good time for bulls to sell and close out their profitable bets, said Gene McGillian,
an 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 sub-freezing 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.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $4.2225/mmBtu, compared with
Tuesday's range of $4.02-$4.16. Cash prices at the Transco Z6 hub in New last traded at $3.97/mmBtu, compared with
Tuesday's range of $3.67 to $3.79.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
November 12, 2014 09:30 ET (14:30 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
111214 14:30 -- GMT
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