DJ Natural Gas At Two-Week High on Expectations for Rising Demand, Lower Supply
By Timothy Puko
Natural gas prices rose to a two-week intraday high Wednesday as expectations for rising demand and lower supply
growth push gas toward a three-session win streak.
Natural gas for July delivery is up 0.5 cent, or 0.2%, at $2.851 a million British thermal units on the New York
Mercantile Exchange. Prices are now up 10% since they settled at a six-week low on Friday.
Prices have been rising all week as weather forecasts have grown incrementally warmer. The Mid-Atlantic region is
likely to see its hottest weather of the year so far on Thursday and Friday with high humidity and temperatures
cresting 90 degrees Fahrenheit, said Commodity Weather Group LLC in Bethesda, Md.
Forecasts haven't changed much on Wednesday, but they have held firm on the hot predictions. That is enough in this
kind of market, analysts said. The forecasts come a few days after the largest buildup of bearish traders in gas since
the financial crisis. A market that crowded can be prone to reversals.
The warm forecasts could be enough to scare many of those bears into quickly unwinding their bets that would profit
if the market falls, analysts and brokers said. Such trades are closed out by buying futures to cover the position,
which may be feeding the rally if many traders are doing that all at once, analysts said.
New, lower supply estimates are also adding fuel to the rally.
"Warm expectations are seeing an exaggerated price response given this week's bullish supply side adjustments," Jim
Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, said in a note.
The U.S. Energy Information Administration on Tuesday trimmed its gas production forecast for every quarter through
2016, adding to evidence that output may be reaching a plateau after a long period of rampant growth. EIA still expects
output to return to setting monthly records in July, but monthly growth rates will be a fraction of a percentage point,
compared with growth which often exceeded 1% a month in 2014.
Energy investment bank Tudor, Pickering, Holt & Co. said in a note it expects supplies to start declining in the
second half of the year. It expects that to push prices higher in the second half of this year and into 2016 as supply
declines hit at the same time that power-sector demand rises.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.92/mmBtu, compared with Tuesday's
range of $2.76-$2.90. Cash prices at the Transco Z6 hub in New York last traded at $3.01/mmBtu, compared with Tuesday's
range of $2.90 to $3.04.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
June 10, 2015 09:45 ET (13:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
061015 13:45 -- GMT
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