Dow Jones - Natural Gas Pares Gains As Weather Outlook Moderates

DJ Natural Gas Pares Gains as Weather Outlook Moderates


   By Christian Berthelsen


  Natural gas futures pared day-earlier gains on Tuesday as weather forecasts for extreme cold in the coming weeks
softened, moderating expectations for gas-fired heating demand.

  Natural gas for December delivery ended the day down 9.7 cents, or 2.2%, at $4.244 a million British thermal units on
the New York Mercantile Exchange, giving back a fraction of Monday's nearly 8% gain in its biggest rally since
February.

  The market continued to exhibit outsize volatility, with analysts and traders saying weather outlooks were pitting
traders with deeply held bullish and bearish views against each other in a battle for control of the market.

  "There's a little bit of tug of war here--do we have enough gas in storage, or is this the beginning of a cold
winter," said Tom Saal, a broker at brokerage INTL FCStone. "There's two extreme views here. It's going to create
volatility."

  The pullback came as traders took profits from a market rally that some analysts said was overdone, and forecasts for
below-normal temperatures over the eastern half of the U.S. at the end of November and beginning of December softened
somewhat.

  Commodity Weather Group said while the overall outlook likely would keep demand steady, temperatures for the end of
the period were trending warmer than prior projections.

  "The market has been swinging wildly on each model flip because it doesn't know what to expect," research consultancy
Gelber & Associates said in a note. "Weather-minded traders seem to treat each 15-day forecast as an indicator of the
entire winter."

  With the strong cold start to the fall and winter heating season, some analysts are projecting an end to the 32-week
run of increases to stockpiles, as demand for gas-fired heating begins to draw on supplies. Producers have rapidly
restored inventories depleted by the severe winter last season, though overall levels remain 6.2% below average for
this time of year.

  Stockpiles have reached 3.6 trillion cubic feet, a level analysts say should be adequate to get through heating
season. The U.S. Energy Information Administration is scheduled to release the latest figures at 10:30 a.m. Thursday.

   FUTURES           SETTLEMENT           NET CHANGE
   Nymex December    $4.244               -9.7c
   Nymex January     $4.365               -7.9c
   Nymex February    $4.333               -6.3c

   CASH HUB          RANGE            PREVIOUS DAY
   El Paso Perm      $4.22-$4.35          $4.24-$4.35
   El Paso SJ        $4.25-$4.35          $4.26-$4.35
   Henry Hub         $4.2925-$4.34        $4.19-$4.30
   Katy              $4.24-$4.28          $4.20-$4.26
   SoCal             $4.42-$4.51          $4.38-$4.50
   Tex East M3       $4.20-$4.45          $4.22-$5.00
   Transco 65        $4.26-$4.3325        $4.25-$4.275
   Transco Z6        $5.25-$7.00          $7.40-$10.15
   Waha              $4.25-$4.30          $4.27-$4.32


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


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  (END) Dow Jones Newswires

  November 18, 2014 14:57 ET (19:57 GMT)

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

111814 19:57 -- GMT
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