Dow Jones Natural Gas - End of Day Commentary

DJ Natural Gas Futures Slide as Supplies Jump



  By Christian Berthelsen


  Natural gas futures suffered their largest one-day drop in more than two months on Thursday as U.S. inventory data
showed supplies rose more than expected last week.

  The natural gas market had been chugging higher earlier in May as above-normal spring temperatures fueled
expectations of higher demand for gas-fired generation to power air conditioning. But Thursday's data showed that even
elevated demand wasn't enough to overcome surging gas production from U.S. shale formations.

  The U.S. Energy Information Administration said national gas stockpiles rose 112 billion cubic feet in the week ended
May 22, compared with the 99 bcf rise projected in a consensus estimate of analysts surveyed by The Wall Street
Journal. The increase brought total stored supplies to 2.1 trillion cubic feet, less than 1% below average for this
time of year, as the market has almost fully recovered from the severe drawdown to power gas-fired heating demand
during the harsh 2013-14 winter.

  Natural gas for July finished the day down 14.1 cents, or 5%, at $2.706 a million British thermal units, its lowest
settlement since April 29 and its largest one-day drop since March 9. The front-month contract fell for the fourth
straight session and has now given back more than 10% since its recent peak in mid-May.

  "Inventory blew away expectations," said Phil Flynn, account executive at Chicago futures brokerage Price Futures
Group. "The market was anticipating stronger demand because of the heat, and it didn't materialize."

  The most recent forecasts suggest weather-driven demand may continue to fizzle. A recent heat wave in the Northeast
is fading, and outlooks for high temperatures into mid-June are losing strength. Forecaster Commodity Weather Group
predicted "another slight drop-off in forecast demand over the next two weeks."

   FUTURES                 SETTLEMENT              NET CHANGE
   Nymex June               $2.706                   -14.1c
   Nymex July               $2.730                   -13.5c
   Nymex August             $2.738                   -13.2c
   CASH HUB                RANGE                   PREVIOUS SESSION
   El Paso Perm            $2.43-$2.48             $2.5525-$2.62
   El Paso SJ              $2.45-$2.47             $2.56-$2.61
   Henry Hub               $2.71-$2.785            $2.80-$2.86
   Katy                    $2.655-$2.73            $2.74-$2.80
   SoCal                   $2.56-$2.58             $2.71-$2.725
   Tex East M3             $1.35-$1.48             $1.54-$1.64
   Transco 65              $2.6975-$2.76           $2.75-$2.83
   Transco Z6              $1.85-$2.35             $2.80-$2.915
   Waha                    $2.57-$2.58             $2.64-$2.70


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  (END) Dow Jones Newswires

  May 28, 2015 15:45 ET (19:45 GMT)

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

052815 19:45 -- GMT
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