Dow Jones Natural Gas - Prices Slide Lower Despite Larger Than Expected Stockpile Drain

DJ Natural Gas Prices Slide Lower Despite Larger-Than-Expected Stockpile Drain
By Timothy Puko

  Natural gas futures slid Thursday as traders took profits, despite federal data showing gas stockpiles dropped more
than expected last week.

  Storage levels shrank by 236 billion cubic feet in the week ended Jan. 9, the U.S. Energy Information Administration
said. It was the 15th largest storage draw in EIA records dating through 1994, indicating especially strong demand. It
was five bcf greater than the 231-bcf consensus average of 18 forecasters surveyed by The Wall Street Journal.

  But most of the buying probably happened Wednesday, when gas gained nearly 10% in advance of the report. By
anticipating the move, many were able to sell and lock in their gains on Thursday after prices touched a nearly
four-week high for intraday trading.

  "It ran too far too fast," said Scott Gettleman, an independent trader in New York.

  Natural gas for February delivery settled down 7.5 cents, or 2.3%, at $3.158 a million British thermal units on the
New York Mercantile Exchange. It was the most volatile day of trading since February.

  Storage levels have now fallen to 2.8 trillion cubic feet, according to the EIA. That is 11% more than a year ago and
3.8% below the five-year average.

  Half of all U.S. homes use natural gas for heating, and the cold start to the month sent demand to as high as 131
billion cubic feet in one day, the second highest ever, according to the American Gas Association. Cold weather can
also shut down a well, and so-called freeze-offs cut supply by more than two billion cubic feet a day, according to
energy investment bank Tudor, Pickering, Holt & Co.

  Strong demand and freeze-offs have brought the market back into a temporary balance after it spent much of the year
oversupplied by at least three bcf a day, the bank said. Traders have noticed, and they are still prepared to bid up
prices at any sign that severe cold is on the way.

  "Anything that's colder than normal, anything that's slightly blue on a map, can continue this rally off $3," said
Aaron Calder, senior market analyst at energy-consulting firm Gelber & Associates in Houston.
FUTURES         SETTLEMENT   NET CHANGE
Nymex February   $3.158      -7.5c
Nymex March      $3.121      -8.7c
Nymex April      $3.036      -7.9c

CASH HUB         RANGE                       PREVIOUS SESSION
El Paso Perm  $3.07-$3.115                    $2.97-$3.07
El Paso SJ    $3.09-$3.115                    $2.96-$3.04
Henry Hub     $3.24-$3.32                     $3.0725-$3.25
Katy          $3.195-$3.26                    $3.07-$3.14
SoCal         $3.19-$3.255                    $3.07-$3.12
Tex East M3   $4.50-$5.75                     $3.85-$4.15
Transco 65    $3.28-$3.32                     $3.07-$3.155
Transco Z6    $6.00-$7.25                     $4.60-$4.75
Waha          $3.11-$3.15                     $3.00-$3.12

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

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  (END) Dow Jones Newswires

  January 15, 2015 15:03 ET (20:03 GMT)

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

011515 20:03 -- GMT
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