DJ Natural Gas Rebounds on Contracting Supply and Demand
By Timothy Puko
Natural gas prices bounced back Tuesday after a day of big losses as supply data from drilling rigs and forecasts
showing cooler weather suggest a contracting balance of supply and demand, analysts said.
Natural gas for April delivery is up 5.6 cents, or 2.1%, at $2.734 a million British thermal units on the New York
Mercantile Exchange. The gains come a day after natural gas lost 5.7%, its third-largest drop of the year.
Some of Tuesday's boost is likely a profit-taking response, analysts said. Money managers have been strongly betting
that gas prices will fall, and many likely cashed out some of those bets by buying back contracts.
The balance of supply and demand today looks tighter--and a little more bullish for prices--than it did yesterday.
There are signs that record supply is slowing and heating demand could be stronger than expected later this month,
analysts said.
Data released yesterday by U.S. Energy Information Administration shows production growth is slowing down in several
of the country's leading gas fields. Even in the Marcellus Shale, where production is still growing year over year, EIA
data suggests this will be the lightest gain in four years, excluding some months after production had been boosted by
an increase in pipeline capacity, according to BNP Paribas SA.
Weather is also helping. Half of U.S. homes use natural gas for heating fuel, and they may need more of it late this
month than traders realized yesterday. Compared to what they showed yesterday, forecasts are showing a range from
slightly to severely cooler weather at the end of the month, which would lead to stronger consumption.
"The market is still showing sensitivity to shifts in the short term temperature forecasts," Jim Ritterbusch,
president of energy-advisory firm Ritterbusch & Associates, said in a note.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.75/mmBtu, compared with Monday's
range of $2.68-$2.75. Cash prices at the Transco Z6 hub in New York last traded at $2.62/mmBtu, compared with Monday's
range of $2.58 to $2.72.
Write to Timothy Puko at tim.puko@wsj.commailto:tim.puko@wsj.com
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(END) Dow Jones Newswires
March 10, 2015 10:02 ET (14:02 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
031015 14:02 -- GMT
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