DJ Natural Gas Rebounds on Cold Start to Spring
By Timothy Puko
Natural gas prices surged to nearly a three-week high after forecasts grew colder, ramping expectations for heating
demand coming in the first week of spring.
Natural gas for March delivery settled up 13.9 cents, or 5.1%, at $2.855 a million British thermal units on the New
York Mercantile Exchange. It is the highest settlement since Feb. 25 and the largest percentage gains in one day since
Jan. 14.
A high pressure front from Canada is likely to send an unseasonably cold burst of air into the Great Lakes and
Northeast, including some of the country's biggest heating markets, according to WSI in Andover, Mass. Half of U.S.
homes use natural gas for heating fuel, and they may need more of it in the last two weeks of March than previously
expected.
"Everyone was telling you that the weather is getting warmer, warmer, warmer, but it isn't," said Michael Doyle, a
broker at Eclipse International Inc. in New York.
Most money managers' positions favor falling prices, and many of those people are probably buying back into the
market to close out those bets, said John Woods, president of JJ Woods Associates and a Nymex trader. Gains can
escalate quickly during that process, known as short covering. Those buyers are coming in at the same time as buyers
who want to benefit from rising prices, crowding the market and raising bids.
"It's a 72-hour trading window based on weather patterns," Mr. Woods said.
Nuclear power plants are also starting their maintenance season, which means gas-fired plants will have to run longer
and consume more, said Gene McGillian, an analyst at Tradition Energy. Power plants just set records for gas
consumption in January and February.
But production has set records, too. And the late-winter demand on the way will be limited in what it can absorb;
even unseasonable cold in March isn't likely to be the type of frigid cold to dramatically drive demand, Mr. McGillian
said.
"The market has a lot of buoyancy to it," he added. "Whether it has the potential to move a lot higher, I'm very
skeptical of that."
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
March 17, 2015 15:08 ET (19:08 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
031715 19:08 -- GMT
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