Dow Jones Natural Gas - Market Suffers Biggest Loss In 11 Months As Weather Forecasts Warm

DJ Natural Gas Has Biggest Losses in 11 Months as Weather Forecasts Warm

   By Timothy Puko and Christian Berthelsen


  Natural-gas futures had their largest day of losses in nearly 11 months as new weather forecasts cut hopes for a
burst of cold to ramp up home heating demand.

  Natural gas for February delivery settled down 29.6 cents, or 9.5%, at $2.831 a million British thermal units on the
New York Mercantile Exchange. The percentage losses were greater than any day since late February. They also come less
than a week after the biggest one-day gains in the past 11 months, a quick reversal that has sent market volatility to
its winter peak.

  The losses extended a losing streak that started Thursday and have nearly erased all the gains from the start of last
week. They had come amid forecasts for a bout of extreme cold to blanket much of the eastern U.S. and a
larger-than-expected draw on supplies according to weekly data from the U.S. Energy Information Administration.

  New forecasts Monday came up much warmer through the end of the month and with a much less extreme cold front in the
early days of February. The changes play in to the positioning of financial investors in the market, with money
managers such as hedge funds having a net bearish bet against the market, according to data released Friday by the U.S.
Commodity Futures Trading Commission.

  "This is the falling knife and you want to stay out of the way on this trade," said Tony Roth, chief investment
officer for Wilmington Trust, the wealth and investment advisory arm of M&T Bank.

  The anticipated drop in demand comes as robust domestic production continues to deliver ample natural gas supplies
throughout the winter. As of last week, the U.S. had 2.8 trillion cubic feet of natural gas in storage, 11% more than a
year ago and just 3.8% below average for this time of year. The warmer temperatures could also help prevent a
phenomenon known as "freeze offs," in which temperatures become too cold to continue producing gas, curbing supplies.


  Write to Christian Berthelsen at christian.berthelsen@wsj.com and Timothy Puko at tim.puko@wsj.com


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  (END) Dow Jones Newswires

  January 20, 2015 15:01 ET (20:01 GMT)

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