Dow Jones Natural Gas - Morning Commentary

DJ Natural Gas Slips on Expectations for Big, Growing Surpluses

  By Timothy Puko

  Natural gas prices are taking their biggest losses of the week as traders believe surpluses are big and growing
bigger.

  Natural gas for May delivery fell 5.4 cents, or 2.1%, at $2.552 a million British thermal units on the New York
Mercantile Exchange.

  Analysts and brokers are expecting data on the way Thursday to show the largest natural gas surplus of the year. The
U.S. Energy Information Administration gives its weekly update on storage levels for the prior week at 10:30 a.m. EDT.

  It is likely to show an 88-billion-cubic-feet addition to storage, nearly double what's common for this time of year,
according to the average forecast of 21 analysts surveyed by The Wall Street Journal. Production has been at or near
record levels for more than a year, so it is overwhelming demand that plummets as mild spring weather cuts the need for
heat and electricity, analysts said.

  "Remember the next few weeks will be the darkest as power sector is challenged to produce sufficient absolute gas
demand," energy investment bank Tudor, Pickering, Holt & Co. said in a note.

  Warming weather forecasts are adding to the belief that surpluses will be plentiful and keep prices low, 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."

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.55/mmBtu, compared with
Wednesday's range of $2.58-$2.625. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of
$2.52/mmBtu to $2.61/mmBtu, compared with Wednesday's range of $2.56 to $2.62.

  Write to Timothy Puko at tim.puko@wsj.com

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  (END) Dow Jones Newswires

  April 23, 2015 09:49 ET (13:49 GMT)

  Copyright (c) 2015 Dow Jones & Company, Inc.

042315 13:49 -- GMT
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