DJ Natural Gas Prices Climb on Larger-Than-Expected Stockpile Drain
By Timothy Puko
Natural gas futures closed higher Thursday, after data showed U.S. storage levels fell further than expected last
week.
The front-month February contract settled up 5.6 cents, or 2%, at $2.927 a million British thermal units on the
New York Mercantile Exchange. It was only the sixth session of gains in the past 17.
Storage levels shrank by 131 billion cubic feet in the week ended Jan. 2, the U.S. Energy Information
Administration said. The drain was 12 bcf greater than the 119-bcf consensus average of 20 forecasters surveyed by The
Wall Street Journal.
John Kilduff, founding partner of Again Capital in New York, said he is going to buy, but that his move would be
limited. Frigid weather around the country this week should push prices above $3/mmBtu soon, but production is so
strong and the risk of a collapsing market is still so great that he can't make a big move, he said.
Thursday's larger-than-expected drain--combined with weather and likely strong heating demand--would usually cause
an upswing two to three times as great, Mr. Kilduff added. But unseasonably warm weather for December helped stockpiles
get so healthy that it limited the response, he said.
"There should be one last (price) surge, especially considering what this weather right now will produce," he
said. But "if you go through $2.80, it's going to be $2.50 in a heartbeat."
The drain brought storage levels to 3.1 trillion cubic feet, 8.8% more than a year ago and 2.1% below the
five-year average. Weather forecasts are showing warmer weather coming again after next week, and analysts have warned
that could create a pattern of withdrawals so small that the deficit to the five-year average could close in a few
weeks. It could also put stockpiles on pace to reach their capacity by the second half of 2015, which would be a major
drag on prices.
Write to Timothy Puko at Tim.Puko@wsj.com
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(END) Dow Jones Newswires
January 08, 2015 15:02 ET (20:02 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
010815 20:02 -- GMT
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