DJ Natural Gas Breaks Three-Session Losing Streak as Weather Forecasts Get Frigid
By Timothy Puko
Natural gas prices bounced off a 2 1/2-year low Monday as weather forecasts are more confidently showing severe cold
and snow spreading over the east, raising expectations for heating demand.
Natural gas for March delivery is up 3 cents, or 1.2%, at $2.609 a million British thermal units on the New York
Mercantile Exchange. Gains had been as high as 3% immediately after electronic trading opened Sunday evening, and the
contract started a gradual retreat after 6 a.m.
Forecasts flipped temperatures from above-normal to below-normal for large portions of the Midwest and Southeast this
week. At least two shots of arctic air are also headed into the Northeast through the middle of the next week, private
forecasters said. The cold temperatures are likely to drive a high amount of heating demand with some of the most
severe weather focused on New York and Boston, according to Weather Services International in Andover, Mass.
"It has to have an impact," said Scott Gettleman, an independent trader in New York who is slightly bullish. "The
problem is there is just so much supply."
Money managers could be looking to take advantage of Sunday evening's boost to make another bearish bet, paring the
gains, he said. Record production for 11-straight months to end 2014 drove money managers to bet against natural gas
for months. Hedge funds, pension funds and others increased their net-bearish position last week to 68,764--from 54,143
week before--the most bearish position since the week ended Nov. 19, 2013, Friday's new CFTC data showed.
The cold might be coming too late to absorb that supply and send prices substantially higher, Jim Ritterbusch,
president of energy-advisory firm Ritterbusch & Associates, told clients in a note. The cold shot could push prices
above $2.70/mmBtu, and traders should look to bet against gas from there, targeting a decline to around $2.50/mmBtu, he
said.
"The market will still need to price in an expected record pace of production," he said.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.60/mmBtu, compared with Friday's
range of $2.52-$2.61. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $4.00/mmBtu to
$7.00/mmBtu, compared with Friday's range of $3.45 to $3.50.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
February 09, 2015 09:47 ET (14:47 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
020915 14:47 -- GMT
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