DJ Natural Gas Keeps Rising on Cold Weather Forecasts
By Timothy Puko
Natural-gas prices were extending their rally into a second session on Thursday, as forecasts for cold weather next
week appear more certain.
Natural gas for January delivery is up 5.2 cents, or 1.4%, at $3.754 a million British thermal units on the New York
Mercantile Exchange. The front-month contract has gained 3.7% since it closed Tuesday within 6 cents of its lowest
settlement of the year.
Weather forecasts are showing a cold front sweeping in by Christmas. More than half the country, from Chicago to Las
Vegas, will see below-normal temperatures by the end of next week, peaking at more than 15-degrees-below normal in
parts of the Rocky Mountain region, according to private meteorologists.
"It's not polar vortex cold, but (it is) significantly colder," said Frank Clements, co-owner of Meridian Energy
Brokers Inc.
Half of U.S. homes use gas for heating, making cold weather a peak driver for the natural gas market. Buyers were
slow to come in, but have responded as the forecasts grew more confident since Tuesday night, Mr. Clements said.
Prices below $3.60/mmBtu also encourage power plants to use more gas, which has inspired speculators to step in and
support prices there, according to energy-consulting firm Gelber & Associates in Houston.
And the oil markets have helped, too: As plummeting oil prices stabilize, commodity traders can stop selling other
energy products that they may have been liquidating to raise cash, Mr. Clements and other analysts have said.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.7075/mmBtu, compared with
Wednesday's range of $3.58-$3.68. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of
$3.80/mmBtu to $3.98/mmBtu, compared with Wednesday's range of $3.70 to $3.75.
Analysts and brokers estimate that 61 billion cubic feet drained from natural-gas stockpiles last week, according to
the consensus average of 19 forecasts in The Wall Street Journal survey. Stockpiles had started the spring with less
than half the gas they had a year ago, but a drain of only 61 bcf last week would nearly close the deficit that has
lingered for months. The U.S. Energy Information Administration gives its weekly storage updates at 10:30 a.m.
Thursday.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
December 18, 2014 09:54 ET (14:54 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
121814 14:54 -- GMT
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