DJ Natural Gas Makes Slight Bounce as Signs Suggest Rising Consumption
By Timothy Puko
Natural gas prices are rising slightly Friday as volatile weather forecasts show conflicting signals about demand.
Natural gas for February delivery is up 1.9 cents, or 0.7%, at $2.619 a million British thermal units on the New York
Mercantile Exchange. Prices had closed at a two-and-a-half-year low on Thursday.
Weather forecasts show above-normal temperatures spreading across nearly the whole country into next week. But they
also show the chance for severe cold coming a week from now, with WeatherBELL Analytics LLC predicting temperatures
about 20-degrees-Fahrenheit below normal in an area including New York and Boston.
Traders are becoming skeptical of some of these predictions, limiting the market's movement, brokers and analyst
said. Models have shown cold spells that didn't come, including this week when a low-pressure pattern from the Pacific
is unexpectedly pushing above-normal temperatures all the way east to parts of the Mid-Atlantic region, said Brad
Harvey, lead meteorologist at MDA Weather Services in Maryland.
"That's a real concern here," he said. "How much cold do you believe will really be in play, based on poor model
performance of late?"
MDA has tempered some of the cold showing up in its models, and adjusted forecasts to show less-severe cold, averaged
between 8 and 15 degrees-below normal in the Northeast late next week. That would have a big implication on gas demand
because half of all U.S. homes use natural gas for heat.
Record supply and often tame weather have combined to leave supplies healthy. A smaller-than-expected drain from
storage last week put levels at 2.4 trillion cubic feet, 24% more than a year ago and 1% below the five-year average,
the U.S. Energy Information Administration said Thursday, bringing down the market. Storage levels are likely to push
past that five-year average by month's end, analyst Jim Ritterbusch told clients in a note Friday.
Gas is getting a lift from power plants already switching to use more gas instead of coal, analysts said. Coal prices
climbed this week, meaning the price at which gas futures get a lift from power consumption has also followed, going
from $2.55/mmBtu to $2.70, according to Energy Aspects.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.58/mmBtu, compared with Thursday's
range of $2.59-$2.66. Cash prices at the Transco Zone 6 in New York last traded at $3.45/mmBtu, compared, compared with
Thursday's range of $6.15 to $6.40.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
February 06, 2015 10:04 ET (15:04 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
020615 15:04 -- GMT
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