Dow Jones Natural Gas - Prices Rally As Colder Forecasts Encourage Buying

DJ Natural-Gas Prices Rally as Colder Forecasts Encourage Buying

  By Timothy Puko

  Natural-gas prices closed with their biggest day of gains in nearly two weeks, rallying on hopes for stronger demand.

  Natural gas for February delivery settled up 14.8 cents, or 5.3%, at $2.943 a million British thermal units on the
New York Mercantile Exchange. Five times this month, prices have rebounded after approaching the $2.80/mmBtu level.

  Weather forecasts encouraged Tuesday's buying, analysts and a broker said. Half of U.S. homes use natural gas heat,
and above-normal temperatures throughout December cut demand, taking down the market at a time it usually peaks. Next
week's forecasts, while warmer-than-normal, were updated overnight with cooler temperatures, raising expectations for
gas heating demand.

  "It is still cold (now) and it doesn't look like people want to step in and go all-out short at this moment because
there is still some time left in winter," said Frank Clements, co-owner of Meridian Energy Brokers Inc. outside New
York.

  With more than two months left in the official winter heating season, traders have to be aware that weather can still
turn severe and drive a spike in demand, Dominick Chirichella, analyst at the Energy Management Institute, said in a
note. Many investors who bet that prices would fall likely found this an ideal time to buy back in so that they could
close out with profitable positions, said Kyle Cooper, managing director of research at IAF Advisors, a Houston
consulting firm.

  "It just boils down to it being a little oversold, really low priced," he added.

  The U.S. Energy Information Administration does expect higher prices for the rest of the year, although it lowered
its expectation from a month ago, it said Tuesday. It expects benchmark Henry Hub spot prices to average $3.44/mmBtu,
down 10% from its December forecast. EIA also released its first 2016 estimates, which put gas at an average of
$3.86/mmBtu for that year.

  Banks have been downgrading their forecasts even further. Citigroup forecast an average price of $2.70/mmBtu in 2015
and Soci?t? G?n?rale forecast a spring price range of $2.75/mmBtu to $2.90/mmBtu.
   FUTURES         SETTLEMENT   NET CHANGE
   Nymex February   $2.943      14.8c
   Nymex March      $2.932      13.7c
   Nymex April      $2.898      11c
   CASH HUB         RANGE       PREVIOUS SESSION
   El Paso Perm    $2.77-$2.815             $2.79-$2.85
   El Paso SJ      $2.79-$2.82             $2.7850-$2.84
   Henry Hub     $2.855-$2.94              $2.88-$2.9150
   Katy            $2.825-$2.89            $2.84-$2.90
   SoCal         $2.89-$2.92               $2.89-$2.93
   Tex East M3   $4.07-$4.70               $4.00-$4.75
   Transco 65    $2.87-$2.9125             $2.85-$2.93
   Transco Z6    $4.40-$6.00               $9.50-$13.00
   Waha          $2.80-$2.825              $2.825-$2.825

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

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  (END) Dow Jones Newswires

  January 13, 2015 16:40 ET (21:40 GMT)

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

011315 21:40 -- GMT
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