Dow Jones - End of Day Commentary

DJ Natural Gas Prices Fall as Focus Moves to Spring Trading

By Timothy Puko

  Natural gas prices fell Wednesday as traders began to focus on an oversupplied spring market.

  Natural gas for March delivery settled down 0.8 cent, or 0.3%, at $2.894 a million British thermal units on the New
York Mercantile Exchange. The March contract expired at the close of trading.

  The more actively traded April contract settled down 2.7 cents, or 0.9%, at $2.862/mmBtu. Gains had been as high as
2% before prices started falling just after 11 a.m.

  Below normal temperatures are going to cover at least the eastern half of the country into mid-March, weather
forecasters said. About half of U.S. homes use natural gas for heating, making cold weather one of the biggest drivers
for demand.

  But the severe, 20-degrees-Fahrenheit-below-normal temperatures will pass after February ends, the forecasters said.
That put a cap on prices during what is still the coldest part of the year, Jim Ritterbusch, president of
energy-advisory firm Ritterbusch & Associates, said in a note to clients.

  "This market is looking increasingly vulnerable to a selloff," he said. He expected prices to fall toward
$2.80/mmBtu.

  Analysts and traders expect government data scheduled for release Thursday to show natural gas inventories shrank by
241 billion cubic feet. That would be the largest withdrawal on record for the second half of February, which is
usually past the peak of winter demand season.

  The strong February demand caused both Simmons & Co. International and Macquarie Group Ltd. on Wednesday to lower
their estimates for the amount of natural gas in U.S. storage at the end of winter. They both expect about 1.4 trillion
cubic feet in storage, down from 1.7 tcf just weeks ago.

  But that won't be enough to keep lifting prices, Macquarie said.

  "While lower storage levels are supportive of the market in the near term, we still expect production growth to weigh
on market sentiment in the spring."
FUTURES            SETTLEMENT               NET CHANGE
Nymex March        $2.894                   -0.8c
Nymex April        $2.862                   -2.7c
Nymex May          $2.889                   -2.7c

CASH HUB         RANGE                        PREVIOUS SESSION
El Paso Perm   $2.95-$3.07                    $2.80-$2.87
El Paso SJ     $2.95-$2.99                    $2.81-$2.85
Henry Hub      $3.165-$3.23                    $3.08-$3.16
Katy           $3.06-$3.16                   $2.96-$3.05
SoCal          $3.00-$3.11                   $2.87-$2.96
Tex East M3    $18.00-$23.50                  $8.75-$14.75
Transco 65     $3.17-$3.23                    $3.1025-$3.145
Transco Z6     $20.00-$25.00                  $13.00-$15.00
Waha           $3.145-$3.20                   $2.93-$2.97

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


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  (END) Dow Jones Newswires

  February 25, 2015 15:19 ET (20:19 GMT)

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

022515 20:19 -- GMT
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