Dow Jones Natural Gas - Natural Gas Sell off Resume

DJ Natural Gas Selloff Resumes on Low Demand Expectations


   By Timothy Puko


  NEW YORK--Natural gas traders restarted their December selloff Monday, giving back nearly all of Friday's gains on
continued expectations for unseasonably low demand.

  Natural gas for January delivery is down 12.5 cents, or 3.3%, at $3.677 a million British thermal units on the New
York Mercantile Exchange. Prices have declined more than 18% from their intraday high above $4.50/mmBtu on Nov. 26.

  The biggest impact is from the weather, with unseasonably warm temperatures forecast across most of the country
almost until Christmas. Half of all U.S. homes use gas for heating, and several analysts have said the market is at
risk of falling prices unless severe cold drives that demand.

  Traders now are focused on the record amount of gas coming from the country's drilling boom, said Gene McGillian, an
analyst at Tradition Energy.

  "The minute you don't have (extreme) weather, all people are looking at is the amount of gas coming out of the
ground," he said. "Without demand, prices basically plunge."

  Friday did bring the market's largest rally in four weeks, but the 4.2% gain wasn't based on supply-and-demand
factors, traders and analysts said. It was likely from traders who bet that prices would fall buying back into the
market to cash in on those bets before the weekend.

  Now traders want to see a cold forecast or some other factor that could ramp up demand, said John Woods, president of
JJ Woods Associates and a Nymex floor trader. That hasn't come yet, leaving few willing to guess where the market will
bottom before the peak demand for home heating starts next month, he added.

  "It's a whole wait-and-see attitude," Mr. Woods said.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.50/mmBtu, compared with Friday's
range of $3.40 to $3.48. Cash prices at the Transco Z6 hub in New York last traded at $3.70/mmBtu, compared with
Friday's range of $3.50 to $3.61.


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


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  (END) Dow Jones Newswires

  December 08, 2014 09:52 ET (14:52 GMT)

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120814 14:52 -- GMT
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