DJ Natural Gas Slumping on Soft Demand, Strong Supply
By Timothy Puko and Nicole Friedman
Natural-gas prices slumped Wednesday on expectations that warmer temperatures in the next two weeks could damp
heating demand.
The front-month May contract settled down 3.5 cents, or 1.3%, at $2.605 a million British thermal units on the New
York Mercantile Exchange. The market has lost ground in eight of 10 sessions, bringing gas within about 1 cent of the
seven-week low, $2.59/mmBtu.
Prices have traded within a narrow range this week. With winter weather fading, indoor-heating demand is expected to
decline. Natural-gas inventories rose last week for the first time this year, and some analysts expect storage
inventories to build up toward full capacity this summer.
The forecasts for the next 11 to 15 days show above-normal temperatures in most of the nation, according to private
forecaster WSI Corp. That would lead to smaller, and maybe the end, of the season's demand for gas-fired heat.
Analysts surveyed by the Wall Street Journal do think storage levels resumed their seasonal fall decline last week,
but with a much smaller drain than usual for this time of year. The U.S. Energy Information Administration gives its
official storage update on Thursdays at 10:30 a.m. EDT, and this week's update is likely to show a decline of 9 billion
cubic feet, according to the survey of 15 analysts.
That is less than half of the 22-bcf decline common for this week of the year, according to EIA data. The storage
update is one of the key indicators of supply and demand, and that small of a withdrawal would indicate strong supply
and/or weak demand.
The change is likely small enough that won't impact prices dramatically, said Dominick Chirichella, analyst at the
Energy Management Institute. Analysts have said that gas traders are now waiting for better data on how quickly power
plants are buying up and consuming gas, likely to be the biggest driver in the market for months to come.
"Tomorrow's withdrawal is going to be pretty much a non-event," Mr. Chirichella said. "We're in a pretty boring
season."
Write to Timothy Puko at tim.puko@wsj.com and Nicole Friedman at Nicole.Friedman@wsj.com
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(END) Dow Jones Newswires
April 01, 2015 15:24 ET (19:24 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
040115 19:24 -- GMT
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