Dow Jones Natural Gas - Morning Commentary

DJ Natural Gas Divided Between Oversupply and Speculators' Maneuvering

   By Timothy Puko


  Natural gas prices fell Wednesday, with the market seesawing between a selloff because of oversupply and buying from
speculators who are preparing for the June contract's expiration.

  Natural gas for June delivery is down 0.9 cent, or 0.3%, at $2.813 a million British thermal units on the New York
Mercantile Exchange. The gains come after natural gas has lost ground in five of the last six sessions. The June
contract expires Wednesday.

  Prices have held close to unchanged because many bears are cashing out to lock in profits after the run of losing
sessions, analysts said. The market is still dealing with a near-record supply heading into a low-demand season, so the
market is primed to move lower except for pauses when speculators make these types of moves to adjust their positions,
they said.

  "You had one wave (of profit-taking) go through, and it seems like that ended," Gene McGillian, an analyst at
Tradition Energy, said after floor trading opened and gas fell from gains to losses. "Now we watch and wait to see if
we get another."

  Wednesday's contract expiration is likely to play a role, Jim Ritterbusch, president of energy-advisory firm
Ritterbusch & Associates, said in a note. The market has been flooded with bearish traders, and many will have to buy
back June contracts to close out those bets in order to roll them over to July, he said.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.8125/mmBtu, compared with
Tuesday's range of $2.81-$2.83. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $2.85/mmBtu
to $2.95/mmBtu, compared with Tuesday's range of $2.80 to $2.95.


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


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  (END) Dow Jones Newswires

  May 27, 2015 09:45 ET (13:45 GMT)

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

052715 13:45 -- GMT
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