DJ Natural Gas Slips as Traders Profit From Recent Rally
By Christian Berthelsen
Natural gas futures eased Friday as traders booked gains from a strong market run-up in recent days with the
appearance of the first winter-like weather of the season that is expected to drive gas-fired heating demand.
Natural gas for December delivery was down 3.6 cents, or 0.8%, to $4.3680 a million British thermal units on the New
York Mercantile Exchange. The market posted a 5% gain a day earlier in the largest jump since June 12 and has risen
more than 23% over eight consecutive trading sessions.
The market has been rallying with the appearance of extreme cold in the forecast over much of the middle of the
country next week, with potential polar vortex conditions extending south from the northern Plains to Texas and
stretching to the Midwest.
Still, the market looked past bearish data in the weekly U.S. inventory report, with stockpiles rising more than
analysts projected and more than double the average increase for this time of year. The addition to storage brought
total inventories to 3.6 trillion cubic feet, higher than the level analysts say will be adequate to get through fall
and winter heating season. Another addition to storage is expected next week, a somewhat unusual occurrence this late
in the year.
Given that, it makes sense for traders to take profits.
"This rally looks really overextended," said Gene McGillian, a senior analyst at brokerage Tradition Energy in
Stamford, Conn. "It was oversold eight days ago, and now it's overbought."
In the physical market, cash prices for next-day delivery at the benchmark Henry Hub in Louisiana last traded at
$4.05, compared with Thursday's range of $3.85 to $4.00 a million Btus. Cash prices at the Transco Z6 hub in New York
traded in a bid-offer spread of $3.35-$4.00 a million Btus, compared with Thursday's range of $3.60-$3.83.
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(END) Dow Jones Newswires
November 07, 2014 09:25 ET (14:25 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
110714 14:25 -- GMT
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