Dow Jones Natural Gas - Market Soaring Ahead of Cold Spell

DJ Natural Gas Still Soaring Ahead of Cold Spell

  By Timothy Puko

  Natural gas prices are extending their rally off of a two-year low into a second-straight session with forecasts for
a January cold spell pushing expectations for stronger heating demand.

  Natural gas for February delivery is up 8.8 cents, or 2.9%, at $3.091 a million British thermal units on the New York
Mercantile Exchange. Prices are up nearly 7% in the last two sessions.

  A cold front will blanket almost all of the country east of the Rockies starting this week, according to
meteorologists. Half of U.S. homes use natural gas for heating, making winter cold the market's primary driver for
demand.

  Temperatures are likely to average more than 15-degrees-Fahernheit below normal in Chicago this week, one of the
country's biggest markets for home heating, according to MDA Information Systems LLC. It is calling for a "stronger
cold that lingers longer" than was expected on Friday.

  "This rally is real because the weather is coming in," said Scott Gettleman, an independent trader in New York. "In
the Midwest it's going to be brutally cold."

  This would be the first major cold spell since November. A historically mild December has limited demand and, coupled
with the record production from the U.S. oil and gas boom, encouraged traders to bet on falling prices into the new
year.

  That is adding to the rally that started Friday, Dominick Chirichella, analyst at the Energy Management Institute,
said in a note to clients. The onslaught of cold is encouraging many of those traders to buy back into the market so
they can close out those bets before the cold leads to any spike in demand, he said.

  "The call on (natural gas) for heating-related demand is finally approaching winter like conditions," Mr. Chirichella
added.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.125/mmBtu, compared with Friday's
range of $2.9575-$3.02. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $6.50/mmBtu to
$35.00/mmBtu, compared with Friday's range of $3.10 to $3.20.

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


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  (END) Dow Jones Newswires

  January 05, 2015 09:38 ET (14:38 GMT)

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

010515 14:38 -- GMT
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