Dow Jones - Natural Gas Prices Near 4-Month High

DJ Natural Gas Near a Four-Month High on Expectations for Rising Demand

   By Timothy Puko


  NEW YORK--Natural gas closed at its highest price since early July as cooling weather forecasts and rising demand
expectations pushed a rally into its seventh session.

  The front-month December contract settled up 6.5 cents, or 1.6%, at $4.194 a million British thermal units on the New
York Mercantile Exchange. That was its highest closing price since gas finished at $4.204 on July 9. The seven-session
rally is the longest winning streak since late November and early December of last year. Wednesday's trade rose as high
as $4.315/mmBtu just after 6 a.m., the first time the front-month contract traded above $4.30 since July 7.

  An early winter chill has flipped a down market. Shale drilling had helped refill storage at a record pace this year,
pushing a new 2014 low price just last week and keeping prices below $4/mmBtu for most of the past four months. But now
forecasts calling for unseasonably cold weather east of the Rocky Mountains are getting even colder. Half of all U.S.
homes use natural gas as their heating fuel, and so traders are expecting a strong rise in demand.

  "We think the lesson of the past week is that seasonal demand strength now trumps bearish storage (additions), and
that may remain the case," Tim Evans, analyst at Citi Futures Perspective, said in a note. "We think new highs are
likely to follow in time, as the market has only begun pricing in the arrival of winter."

  Commodity Weather Group LLC said Wednesday that Chicago, one of the country's largest markets for gas-fueled heating,
will see temperatures dip into the teens as the cold spell peaks in the middle of next week. Even parts of Texas,
including the Dallas area, could see temperatures in the 20s, it added. The number of heating degree days--a measure of
how often consumers likely needed to use gas heat--is likely to be 20% larger this November than the month's 10-year
average, Citigroup Inc. said in a note late Tuesday.

  Thursday, however, could put at least a temporary brake on the rally, analysts said. Tomorrow's weekly gas storage
update is likely to show an 86-billion-cubic-feet addition to stockpiles, more than double the average addition for
this time of year, according to The Wall Street Journal's survey of 16 analysts, brokers and traders.

  "Today's buying surge seems a bit premature," Aaron Calder, senior market analyst at energy-consulting firm Gelber &
Associates in Houston said in a note. "Tomorrow's injection will provide a reminder that the market is still
oversupplied ... . However as long as the forecasts are cold, speculative and fear-based buying will push prices
higher."


FUTURES           SETTLEMENT           NET CHANGE
Nymex December    $4.194               +6.5c
Nymex January     $4.287               +6.1c
Nymex February    $4.253               +4.5c

CASH HUB                RANGE                                PREVIOUS DAY
El Paso Perm           $3.63-$3.90                           $3.35-$3.45
El Paso SJ             $3.64-$3.90                           $3.35-$3.40
Henry Hub              $3.725-$3.90                         $3.59-$3.80
Katy                   $3.63-$3.87                            $3.40-$3.53
SoCal                  $3.79-$4.04                           $3.48-$3.65
Tex East M3            $3.23-$3.50                          $2.54-$3.00
Transco 65             $3.68-$3.835                           $3.53-$3.63
Transco Z6             $3.15-$3.40                          $2.72-$3.00
Waha                   $3.66-$3.71                          $3.40-$3.42

  Write to Timothy Puko at tim.puko@wsj.com


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  (END) Dow Jones Newswires

  November 05, 2014 15:09 ET (20:09 GMT)

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

110514 20:09 -- GMT
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