DJ Natural Gas Rebounds on Cold Start to Spring
By Timothy Puko
Natural gas prices are surging to their biggest gains in two months as forecasts grow colder, suggesting stronger
demand for the first week of spring.
Natural gas for April delivery is up 12.9 cents, or 4.7%, at $2.841 a million British thermal units on the New York
Mercantile Exchange. The April contract hasn't gained that much 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 late this month than traders realized yesterday.
"It's a 72-hour trading window based on weather patterns," said John Woods, president of JJ Woods Associates and a
Nymex trader.
Most money managers' positions favor falling prices, and many of those people are probably buying back into the
market to close out those bets, Mr. Woods said. 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.
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."
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.80/mmBtu, compared with Monday's
range of $2.645-$2.68. Cash prices at the Transco Z6 hub in New York last traded at $2.84/mmBtu, compared with Monday's
range of $2.60 to $2.71.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
March 17, 2015 10:13 ET (14:13 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
031715 14:13 -- GMT
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