DJ Natural Gas Retreat Continues as Weather Forecasts Warm
By Timothy Puko
NEW YORK-Natural gas added to last week's losses overnight as warming weather forecasts and effects from the crude
selloff continue to rip through energy markets.
Natural gas for January delivery is down 9.8 cents, or 2.4%, at $3.99 a million British thermal units on the New York
Mercantile Exchange. This is the first time in two weeks that the front-month contract has traded below $4/mmBtu. It
has declined about 12% from its intraday high above $4.50/mmBtu on Wednesday.
Weather is providing the biggest blow to prices, with fears of a cold December starting to dissipate. Half of all
U.S. homes use gas for heating, and traders had been bidding up the price as weather forecasts indicated a cold start
to peak winter season for demand.
But the polar front that had been so threatening is moving out within the next week, likely bringing lower demand for
heating, weather forecasts say. Weather Services International in Andover, Mass., said Monday that "the 6-10 day period
may feature rather widespread above-average temperatures across the nation."
The natural gas market, which had spent most of the last session on Friday in retreat, immediately opened nearly 3%
lower Sunday evening, underscoring the response to updated weather forecasts.
The decline also probably included pressure from the crude markets, traders and brokers said. Oil took massive losses
on Thursday and Friday after OPEC leaders failed to cut their production ceiling in order to help end a months-long
slide in crude prices. As traders look to meet margin calls because of that collapse, they're likely to sell their
positions in natural gas and other commodities to help raise cash, traders and brokers said.
"That was a pretty violent move down," for crude said Scott Gettleman, an independent trader in New York.
The natural-gas market has essentially stabilized since it opened, but there is so much pressure and volatility in
energy markets right now that it could easily fall another 5% to prices just above $3.70/mmBtu if it starts to slide,
he added.
"It seems far away, but it gets there pretty quick these days," Mr. Gettleman said.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.90/mmBtu, compared with the range
of $4.20-$4.27 on Wednesday, the most recent day's data available from ICE. Cash prices at the Transco Z6 hub in New
York last traded at $3.60/mmBtu, compared with Wednesday's range of $3.97 to $4.10.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
December 01, 2014 10:07 ET (15:07 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
120114 15:07 -- GMT
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