DJ Natural-Gas Futures Extend Rally
By Christian Berthelsen
Natural-gas futures rose for the fifth straight session, driven by expectations that a heat wave along the East Coast
in the coming days could drive power plant demand to generate electricity for air conditioning.
The front-month June natural gas contract rose 4.5 cents, or 1.6%, to settle at $2.821 a million British thermal
units on the New York Mercantile Exchange. It was the market's highest settlement since March 18. Prices have gained
more than 13% since setting a new 52-week low just a week ago.
Weather forecasts say the Northeast and Eastern Seaboard are set to be hit with much-above normal temperatures until
the middle of the month, before settling back to more seasonal levels in the second half. With more power plants
switching to natural gas as a source fuel for generation, that could mean a spike in gas demand as people run air
conditioners and fans to cool off.
"Power generators have flipped to natural gas in a big way," said Phil Flynn, an account executive at brokerage Price
Futures Group in Chicago.
Analysts said the rally may also be least in part because of traders closing out bearish bets against the market as
it has risen. Financial investors in the market such as hedge funds and other money managers have been betting heavily
on falling prices, with short sales running nearly twice the level of longs. Short trades are closed out by buying
futures to cover the position.
Still, some analysts believe the rally won't last long as market fundamentals remain bearish, with the first
triple-digit increase in inventories expected this week.
Natural-gas inventories totaled 1.7 billion cubic feet as of last week's report by the U.S. Energy Information
Administration, 77% above last year's severely depleted levels and just 4.2% below average for this time of year. That
deficit could quickly disappear if production remains robust and the U.S. has another mild summer.
"We see more downside risk to prices ahead," BNP Paribas said in a note. "Given our expectation of prolonged price
weakness, this particular contract appears vulnerable to correction."
The market for next-day delivery of physical gas reflected strong demand, with prices that were about 5% higher at
key delivery hubs in New York and Louisiana than Friday.
FUTURES SETTLEMENT NET CHANGE
Nymex June $2.821 +4.5c
Nymex July $2.878 +4.7c
Nymex August $2.898 +4.9c
CASH HUB RANGE PREVIOUS SESSION
El Paso Perm $2.47-$2.54 $2.345-$2.395
El Paso SJ $2.53-$2.5525 $2.3525-$2.39
Henry Hub $2.69-$2.80 $2.54-$2.66
Katy $2.66-$2.70 $2.46-$2.60
SoCal $2.67-$2.69 $2.50-$2.54
Tex East M3 $1.75-$1.87 $1.55-$1.65
Transco 65 $2.70-$2.73 $2.50-$2.61
Transco Z6 $2.74-$2.79 $2.57-$2.64
Waha $2.57-$2.61 $2.4025-$2.48
Write to Christian Berthelsen at christian.berthelsen@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
May 04, 2015 15:43 ET (19:43 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
050415 19:43 -- GMT
------
No comments:
Post a Comment