Dow Jones Natural Gas - Market Bounces As Weather Forecasts Grow Colder

DJ Natural Gas Bounces as Weather Forecasts Grow Colder



  By Timothy Puko


  Natural gas closed with strong gains on Tuesday, briefly cracking the $3 mark for the first time in more than a week
on colder weather and options expiration.

  The front-month February contract settled up 10 cents, or 3.5%, at $2.981 a million British thermal units on the New
York Mercantile Exchange. Trading went as high as $3.005/mmBtu, highest in intraday trading since Jan. 16.

  The more actively traded March contract settled up 8.7 cents, or 3%, at $2.935/mmBtu. Options expired at close and
the February contract expires Wednesday at close.

  Many options traders sold puts with a $3 strike price, and they had an incentive to bid up the futures contract
Tuesday to avoid paying out on their options deal, said Aaron Calder, senior market analyst at energy-consulting firm
Gelber & Associates in Houston.

  Colder weather helped, too. The blizzard that hit the Northeast is part of a spate cold weather settling in over the
eastern half of the country for at least two weeks, meteorologists said. The Northeast will take the worst of the cold
in the coming days, but below-normal temperatures are likely to spread all the way to the Rockies by Feb. 5, according
to Weather Services International in Andover, Mass.

  "Colder Northeastern temperatures and the promise of more to come are dragging up cash prices and futures are coming
along for the ride," Mr. Calder wrote in a note to clients.

  Half of U.S. homes use natural gas heat, and the colder weather would raise expectations for gas heating demand.
Demand should stay above normal for at least the next week or two, said Dominick Chirichella, analyst at the Energy
Management Institute.

  "Everybody's staying home. You've got to heat your house," said Frank Clements, co-owner of Meridian Energy Brokers
Inc. outside New York. "I think you'll see definitely demand go up."


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


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  (END) Dow Jones Newswires

  January 27, 2015 14:53 ET (19:53 GMT)

  Copyright (c) 2015 Dow Jones & Company, Inc.

012715 19:53 -- GMT
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