DJ Natural Gas Surges on Signs of Cold Weather and Heating Demand
By Timothy Puko
Natural gas is rebounding Friday as weather forecasts for a frigid East Coast spark hopes of strong demand for the
heating fuel.
Natural gas for February delivery is up 10.5 cents, or 3.7%, at $2.94 a million British thermal units on the New York
Mercantile Exchange. The market has not had back-to-back gains or losses yet this week.
Weather forecasts look especially promising because of far-below normal temperatures hovering over the New York
metropolitan area through at least the first week of February. A cold front descending on the entire East Coast is also
likely to spread the Midwest's big heating markets by the end of January.
"What you're seeing this morning is more confidence that February will begin on a cold note," said Teri Viswanath, a
natural-gas strategist at BNP Paribas SA in New York.
Ms. Viswanath warned that that may have only limited impact unless the cold lingers over both of those regions for a
prolonged period. Production is still growing enough to cover just about anything except sustained, exceptional demand.
Low prices are forcing producers to moderate their growth by about 2 billion cubic feet a day, but that isn't likely
enough to balance the market, Macquarie Group Ltd. said in its new "Commodities Compendium." It expects year-over-year
growth to continue in 2015 at about 4 bcf a day, keeping up production's record pace of about 73 bcf a day.
"As a direct result, barring extremely cold weather during the remainder of 2015, followed by a hot summer, we find
little to support the market in the near term," researchers for the Australian investment bank wrote. "If 2014 has
taught us anything, it's that America's natural gas producers are like the Marine Corps of the energy industry--they
adapt, modify, and persevere in any manner needed to continue growing production."
It expects prices to test levels near mid $2/mmBtu. To balance, the market will probably need to go low enough to get
power generators in Texas to use gas instead of very cheap coal, it said.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.94/mmBtu, compared with Thursday's
range of $2.90-$2.955. Cash prices at the Transco Z6 in New York traded with a bid of $4.00/mmBtu but no ask, compared
with Thursday's range of $3.23 to $3.28.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
January 23, 2015 09:40 ET (14:40 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
012315 14:40 -- GMT
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