DJ Natural Gas Retreats After Big Bump
By Timothy Puko
Natural-gas futures plummeted to a new two-year low on Monday, undoing big gains that started the session as traders
looked to cash in on a volatile market.
Natural gas for February delivery settled down 12.1 cents, or 4%, at $2.882 a million British thermal units on the
New York Mercantile Exchange. Prices had climbed more than 5% after electronic trading opened Sunday evening, then
steadily retreated just before floor trading opened in the morning.
Both bulls and bears sold, a trader and a broker said. People who bet prices would rise late last week cashed out
those bets to lock in profits, while people who believe prices will fall wanted to take advantage of higher prices to
place new bets, they said.
Record production is keeping many investors bearish even with a burst of cold spreading across the country this week,
said Michael Doyle, a broker with Eclipse International Inc. Prices are now down more than 35% since Nov. 20, a time
when they would often take off ahead of the peak season for gas-fired heating. Mr. Doyle noted that many shale-gas
producers still can make money at prices lower than they are today.
"Funds are still looking for places to sell it," he said. "I'm sure they're much more bearish than they were 10
minutes ago."
A cold front will blanket almost all of the country east of the Rockies starting this week, according to
meteorologists. Half of U.S. homes use natural gas for heating, making winter cold the market's primary driver for
demand.
Temperatures are likely to average more than 15 degrees Fahrenheit below normal in Chicago this week, one of the
country's biggest markets for home heating, according to MDA Information Systems LLC. It is calling for a "stronger
cold that lingers longer" than was expected on Friday.
"It's amazing this market just can't hold a rally," said Scott Gettleman, an independent trader in New York. "In the
Midwest it's going to be brutally cold."
This would be the first major cold spell since November. A historically mild December has limited demand for natural
gas and, coupled with the record production from the U.S. oil and gas boom, encouraged traders to bet on falling prices
into the new year.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
January 05, 2015 15:00 ET (20:00 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
010515 20:00 -- GMT
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