Dow Jones Natural Gas - Morning Commentary

DJ Natural Gas Pulls Back from 'Overcooked' Rally


   By Timothy Puko


  Natural gas prices are inching lower Tuesday morning, as traders pull back from a five-session rally.

  Prices for the front-month June contract fell 2.4 cents, or 0.9%, to $2.797 a million British thermal unit on the New
York Mercantile Exchange. Monday's trading had started lower, too, before the market pushed into gains for the fifth
straight session, up now 12.3% from the nearly three-year low it set April 27.

  Analysts are warning that the rally pushed too far, too fast. Demand is likely to increase in the summer, but
production is still near a record high. And for the next few weeks, temperatures look very comfortable, enough to
create big surpluses of natural gas because there won't be a demand for it to heat homes or burn it for electricity to
run air conditioners.

  "The recent price rally ... has simply become overcooked," Jim Ritterbusch, president of energy-advisory firm
Ritterbusch & Associates, said in a note to clients. "The market appears (overpriced) by as much as 25-30 cents given
the fact that ... short-term temperature forecasts are negligibly changed from a week ago."

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.75/mmBtu, compared with Monday's
range of $2.69-$2.80. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $2.65/mmBtu to
$3.00/mmBtu, compared with Monday's range of $2.74 to $2.79.


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


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  (END) Dow Jones Newswires

  May 05, 2015 09:18 ET (13:18 GMT)

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050515 13:18 -- GMT
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