Dow Jones Natural Gas - Small Than Expected Stockpile Addition

DJ Natural Gas Surges Past $3 on Smaller-Than-Expected Stockpile Addition


  By Timothy Puko


  Natural gas prices surged past $3 for the first time since the middle of winter after a weekly update on storage
levels showed a smaller surplus than expected.

  The U.S. Energy Information Administration said storage levels grew by 111 billion cubic feet in the week ended May
8. That is 6 bcf less than the 117-bcf average of forecasters surveyed by The Wall Street Journal.

  The EIA update is widely considered one of the best measures of supply and demand for the natural gas market. This
draw would indicate slightly smaller supply or larger demand than expected.

  The front-month June contract sprung from losses of about 1% before the data to gains of 4.5 cents, or 1.5%, at $2.98
a million British thermal units on the New York Mercantile Exchange. Prices peaked Thursday at $3.02/mmBtu, the first
time they crested $3/mmBtu since Feb. 23. Even with a slight pullback, gas is still close to bull market territory and
cracking 20% gains since it closed at a 2 1/2-year low less than three weeks ago.

  Many have said traders who move based on momentum and an overcrowded bearish position have caused the turnaround. But
Teri Viswanath, a natural-gas strategist at BNP Paribas SA in New York, said weather is the primary driver.

  May has been warm so far in the populous East Coast markets. Temperatures there are more akin to those from June when
people fire up air conditioners and power plants have to run more and consume more natural gas, Ms. Viswanath said.

  "The market is really expecting that the power sector will bail out an oversupplied market," she added.

  Last week's addition brought storage levels to 1.9 trillion cubic feet, 66% more than a year ago and 2% below the
five-year average.


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  (END) Dow Jones Newswires

  May 14, 2015 11:03 ET (15:03 GMT)

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

051415 15:03 -- GMT
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