Dow Jones Natural Gas - Market Stabilized By Blast of Arctic Cold

DJ Natural-Gas Prices 'Stabilized' by Blast of Arctic Cold


   By Timothy Puko


  Natural-gas prices were on the rise Wednesday for the third time in four days, as a blast of Arctic cold has halted
the market's precipitous decline.

  Natural gas for February delivery was up 2.3 cents, or 0.8%, at $2.961 a million British thermal units on the New
York Mercantile Exchange. The market is up 2.7% since last Wednesday.

  "Gas prices have stabilized," Dominick Chirichella, analyst at the Energy Management Institute, said in a note.

  That doesn't, however, mean they are likely to have a strong rally. Chirichella said prices aren't likely to get back
to $4/mmBtu this winter, and BNP Paribas SA strategist Teri Viswanath said a ceiling is developing at $3.25.

  This could be the coldest spell of the year, and above-normal temperatures are likely coming within weeks, they said.
December had already been unseasonably warm, keeping demand low and allowing producers to ramp up production enough to
cover any strong bursts of heating demand, Mr. Chirichella said.

  Production set a new record by averaging at 72.8 billion cubic feet a day in December, according to Platts oil and
gas analytics unit Bentek Energy. That is up 11.6% compared with daily average production levels in December 2013, it
said.

  Spot trading at the premium-priced New York hub, Transco Z6, has gone as high as $20/mmBtu this week, but even that
is a sign of how well supplied the market is, Ms. Viswanath said in a note. Prices on the same day last year rose to as
much as $90/mmBtu, she noted. Weather was colder, heating demand was higher and supplies were all shorter a year ago.

  Money managers have already moved to their shortest position, with the most net bets on falling gas prices in more
than a year. That means that even small bumps like Wednesday's could be quickly undone as those investors keep looking
to sell, said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates. It creates a high risk for
big losses on any data that emphasizes how oversupplied the market is, he added.

  "We are viewing this as a sell-rallies market," he advised clients.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $3.05/mmBtu, compared with Tuesday's
range of $2.90-$3.005. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $11.25/mmBtu to
$20.00/mmBtu, compared with Tuesday's range of $15.00 to $20.00.


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


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  (END) Dow Jones Newswires

  January 07, 2015 09:49 ET (14:49 GMT)

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

010715 14:49 -- GMT
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