Dow Jones Natural Gas - Morning Commentary

DJ Natural Gas Falls as Severe Cold Can't Outweigh Healthy Supply



  By Timothy Puko


  Natural gas prices are falling slightly despite extreme cold and high demand as many analysts say the demand is not
enough to overcome strong supply.

  Natural gas for March delivery is down 0.4 cents, or 0.1%, at $2.755 a million British thermal units on the New York
Mercantile Exchange.

  Below-normal temperatures are going to cover most of the country through the first week of March, Commodity Weather
Group said in its Wednesday forecast. About half of U.S. homes use natural gas for heat, meaning cold weather is one of
the biggest drivers for demand.

  The cold weather is severe, with temperatures more than 15 degrees Fahernheit below normal likely to linger from St.
Louis to Buffalo until the end of February. Similar cold in New York this week has already pushed spot prices as high
as $42/mmBtu.

  But production has been so strong that, despite the demand, storage levels have likely surpassed their five-year
average, said Matt Smith, an analyst at consultant Schneider Electric SA in Louisville, Ky. The U.S. Energy Information
Administration will give its weekly update on storage levels Thursday morning.

  "In spite of the cold blast the market sentiment remains neutral at best," said Dominick Chirichella, analyst at the
Energy Management Institute. "There is ample supply available in inventory as well as from the current robust
production level to handle any weather."

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.89/mmBtu, compared with Tuesday's
range of $2.90-$2.97. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $22.00/mmBtu to
$70.00/mmBtu, compared with Tuesday's range of $30.00 to $42.00.


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


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  (END) Dow Jones Newswires

  February 18, 2015 09:29 ET (14:29 GMT)

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

021815 14:29 -- GMT
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