DJ Natural Gas Prices Slip After Larger-Than-Expected Add to Stockpiles
By Timothy Puko
Natural gas prices slipped steadily Thursday as large stockpiles and the threat of larger ones reinforced the idea
that the market is oversupplied.
The U.S. Energy Information Administration said storage levels grew by 90 billion cubic feet in the week ended April
17. That is double the addition from the same week a year ago and 2 bcf more than the 88-bcf consensus average of 21
forecasters surveyed by The Wall Street Journal.
The EIA update is widely considered one of the best measures of supply and demand for the natural gas market. This
injection would indicate slightly larger supply or smaller demand than expected.
Natural gas for May delivery settled down 7.5 cents, or 2.9%, at $2.531 a million British thermal units on the New
York Mercantile Exchange. It had already been trading about 2% lower to start the session, and losses accelerated for
another 90 minutes after EIA's data release.
"It is really hammering home this oversupply trend," said Aaron Calder, senior market analyst at energy-consulting
firm Gelber & Associates in Houston.
It is the third week in a row that storage levels increased more than expected. It appears that the season's big
swing buyer, power plants, don't have the capacity to use more gas despite its already low prices, Mr. Calder said.
"If we're ever going to get out of these doldrums it's going to have to be on the supply side, where we're going to
have to see tapering off in production," Mr. Calder added.
This was the year's biggest storage addition so far. At this time a year ago, gas storage grew by only 45 bcf, which
is about the five-year average, too. This addition brought storage levels to 1.6 trillion cubic feet, 82% more than a
year ago and 5.8% below the five-year average.
Warming weather forecasts indicate the surpluses will only get bigger in the weeks to come, said Bob Yawger, director
of the futures division at Mizuho Securities USA Inc. Forecasts are showing normal and above-normal temperatures
covering most of the country two weeks from now, pushing out slightly below-normal temperatures that had been in the
forecasts for the east.
"That puts pressure on price," Mr. Yawger said. "You can only imagine that next week and the week after that the
storage number will be pretty big."
Write to Timothy Puko at Tim.Puko@wsj.com
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(END) Dow Jones Newswires
April 23, 2015 15:00 ET (19:00 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
042315 19:00 -- GMT
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