DJ Natural Gas Futures Fizzle as Heat Forecast Fades
By Christian Berthelsen
Natural gas futures slipped Tuesday as forecasts for an East Coast heat wave faded, dashing expectations for a bout
of gas-fired cooling demand.
Natural gas for June delivery was down 7.6 cents, or 2.6%, at $2.8110 a million British thermal units, the lowest
level in two weeks on the New York Mercantile Exchange. The June contract expires Wednesday.
The loss extended last week's slide for the market, which is giving back gains made in early May as concerns mount
about robust production and more than adequate supplies.
The May rally was driven by hotter-than-average temperatures that were expected to provide a boost for natural gas
demand to generate power and run air conditioning. But the most recent forecasts show that trend is beginning to
moderate, with a spate of much-above normal temperatures in the Northeast fading in the coming days and predictions for
renewed heat into early June losing strength, according to forecaster Commodity Weather Group.
"Power demand that has fueled much of the strong price advance during the first (weeks) of this month appears to have
subsided," research consultancy Ritterbusch and Associates said in a note.
Soaring natural gas production has helped to almost fully restore supplies that were severely depleted by the harsh
cold of the 2013-2014 winter. Domestic inventories are now just 1.7% below average for this time of year, and analysts
expect the market could flip to a surplus by next month. Hedge funds and other money managers remain bearish overall on
the contract, according to data from the U.S. Commodity Futures Trading Commission released Friday.
Cash prices for next-day delivery of physical gas reflected the reduced demand. Gas at the benchmark Henry hub in
Louisiana last traded at $2.82 a million Btus, below Friday's range of $2.86-$2.91. There were no bids or offers for
gas at the Transco Z6 hub in New York.
Write to Christian Berthelsen at Christian.Berthelsen@wsj.com
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(END) Dow Jones Newswires
May 26, 2015 09:14 ET (13:14 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
052615 13:14 -- GMT
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