DJ Natural Gas Hits Four-Session Skid on Low Demand Expectations
By Timothy Puko
NEW YORK--Natural gas prices extended their losing streak to a fourth session and set a fresh one-month low with
December weather forecasts suggesting unseasonably weak demand for gas heating.
Natural gas for January delivery is down 7.7 cents, or 2%, at $3.797 a million British thermal units on the New York
Mercantile Exchange. The front-month contract has lost nearly 13% in less than a week's trading. Wednesday's session is
on pace to be the fourth straight with losses of 2% or more.
"I thought it would come off. I didn't think it would come off that aggressively," said John Woods, president of JJ
Woods Associates and a Nymex trader.
The move is especially surprising on the verge of the winter heating season, Mr. Woods added. Half of all U.S. homes
use natural gas for heating, and the winter cold is usually the biggest driver for gas demand. But mild weather
forecasts into mid-December are encouraging traders to sell at a time usually popular for buyers.
Demand has been lackluster except for a burst of cold in mid-November, said Teri Viswanath, a natural-gas strategist
at BNP Paribas SA in New York. Demand is so low in some areas that they can put more production into storage than
consumers are taking out for heating and gas-fired power. That trend could lead to storage levels catching up to last
year's levels for the first time this year in late December, and prices could be down by more than 20% in a matter of a
few weeks, she said.
"It's just amazing," Ms. Viswanath added. "Even potential bargain investors are not going to come off the sidelines
until they see some measure of cold enter the forecast."
Weather forecasts are showing nearly all of the country covered by above-normal temperatures through Dec. 17, and
they are getting even warmer than they already have been. MDA Weather Services is predicting temperatures 5- to
15-degrees- Fahrenheit above normal for at least half of the country during that span.
The trader Mr. Woods expects prices to rise as January approaches, but he is still unlikely to buy today, he said.
The natural gas market has technical support--set by previous lows--at $3.68/mmBtu, and he won't risk buying into a
market that could keep falling until it gets there, he said.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.64/mmBtu, compared with Tuesday's
range of $3.71-$3.775. Cash prices at the Transco Z6 hub in New York last traded at $3.80/mmBtu, compared with
Tuesday's range of $3.49 to $3.57.
Write to Timothy Puko at tim.puko@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
December 03, 2014 09:48 ET (14:48 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
120314 14:48 -- GMT
------
No comments:
Post a Comment