Dow Jones Natural Gas - Prices Drift Lower As Traders Expect Bearish Stockpile Update

DJ Natural Gas Keeps Drifting Lower As Traders Expect Bearish Stockpile Update


  By Timothy Puko


  Natural gas prices are falling in low-volume trading as traders dig in before what is expected to be a bearish update
on natural gas stockpiles.

  Natural gas for March delivery is down 4.4 cents, or 1.7%, at $2.618 a million British thermal units on the New York
Mercantile Exchange. It would be the sixth losing session of the last seven.

  Trading volumes are light ahead of what is often a pivotal update from the U.S. Energy Information Administration
updates on storage levels, scheduled for 10:30 a.m. EST. Analysts and brokers expect the report to be a very bearish
comparison of supply and demand for the peak of winter home heating season. Stockpiles likely fell by 121 billion cubic
feet of gas during the week ended Jan. 30, a quarter less than they usually do for this time of year, according to the
average forecast of 18 analysts and brokers surveyed by The Wall Street Journal.

  Heating degree days--a measure of how much the weather influences demand for home heating--were 11% below normal
during that week, according to the energy investment bank Tudor, Pickering, Holt & Co.

  "On a weather adjusted basis, the gas market over the last couple of weeks looks materially tighter than earlier in
the winter...now we just need some normal winter weather," the bank's analysts said in its Thursday note to clients.

  Updated weather forecasts from Thursday are showing colder-than-expected weather settling in for the next two weeks
in some of the country's biggest heating markets. But many traders are reluctant to make big moves in the hours before
the EIA's update comes out, limiting any response to those updates said Tom Saal, a broker at INTL FCStone Latin
America in Miami.

  Half of U.S. homes use natural gas for heat, and severe winter cold can push demand for gas to record levels. But
traders have also grown skeptical of forecasts for sustained cold that haven't reliably come through this winter, Mr.
Saal said.

  "Traders are getting jaded with these cold forecasts," he added. "They don't really materialize. You get the cold
weather for a couple days and then it's gone."

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.62/mmBtu, compared with
Wednesday's range of $2.68-$2.755. Cash prices at the Transco Z6 in New York traded in a bid-ask range of $6.25/mmBtu
to $10.00/mmBtu, compared with Wednesday's range of $12.00 to $13.50.


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


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  (END) Dow Jones Newswires

  February 05, 2015 09:34 ET (14:34 GMT)

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

020515 14:34 -- GMT
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