Dow Jones - End of Day Commentary

DJ Natural Gas Prices Fall After Smaller-Than-Expected Storage Withdrawal


  By Timothy Puko


  NEW YORK--Natural-gas futures fell Wednesday after news that stockpiles drained at barely half the pace expected for
last week.

  Storage levels shrank by 22 billion cubic feet in the week ended Nov. 28, the U.S. Energy Information Administration
said. The drain was 21 bcf lower than the average expectations of 16 analysts surveyed by The Wall Street Journal.

  Natural-gas prices added another 4.6 cents, or 1.2%, to losses they already sustained through the morning. The
front-month January contract recently traded down 12 cents, or 3.2%, on the day at $3.685 a million British thermal
units on the New York Mercantile Exchange.

  The Thanksgiving holiday, with offices and schools closed, likely limited demand, said Kyle Cooper, managing director
of research at IAF Advisors, a Houston consulting firm. Temperatures were so mild and demand was so low in the Gulf
Coast region that it actually added 11 bcf of gas to storage.

  However, Mr. Cooper warned traders not to push prices down too far. The unexpectedly small drain isn't necessarily a
sign of a developing trend, he said.

  Don't "overanalyze it. It was Thanksgiving," Mr. Cooper said.

  The drain brought storage levels to 3.4 trillion cubic feet, 9.8% lower than the five-year average. Last winter's
historic cold and record demand put stockpiles at an 11-year low and some traders are still concerned about the deficit
that is lingering into this winter. However, analysts have warned that weather appears to be staying warm for long
enough that small withdrawals could close that deficit before the end of the year.


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


  Corrections & Amplifications

  This item was corrected at 3:15 p.m. ET misstated the size of the storage withdrawal in the headline. The withdrawal
was smaller than expected, not larger.

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  (END) Dow Jones Newswires

  December 04, 2014 11:07 ET (16:07 GMT)

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120414 16:07 -- GMT
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