DJ Natural Gas Slides on Growing Production and Surpluses
By Timothy Puko
Natural gas prices are sliding on Wednesday as traders respond to increasing production and the expectation for
growing weekly surpluses.
Natural gas for July delivery was down 3.9 cents, or 1.3%, at $2.659 a million British thermal units on the New York
Mercantile Exchange. The decline would break a two-session win streak that several attributed to bearish traders
covering their bets.
The market is still biased toward a belief in oversupply and falling prices, analysts and traders said. The U.S.
Energy Information Administration late Tuesday revised recently released first-quarter data that had shown falling
production so that it now shows slightly rising production. EIA data showed production hit 73.5 billion cubic feet a
day in the first quarter, a record and a 0.3% increase from the fourth quarter of 2014.
Strong production had oversupplied the market by 3 bcf a day two weeks ago, according to analysts. And many expect
that to continue. Last week's addition to storage may have hit 122 bcf, according to the average of 11 forecasts
submitted to The Wall Street Journal. That would be among the five largest in EIA data that goes back through 1994.
EIA releases its weekly storage updates on Thursday at 10:30 a.m.
All the indicators of oversupply reinforce the inclination to sell that has dominated the natural gas market for
nearly a year now, said Michael Doyle, a broker at Eclipse International Inc. in New York.
"It's always been in bearish mode," he said. "You're always going to get rips to the upside, and it's just another
chance to sell."
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.62/mmBtu, compared with Tuesday's
range of $2.60-$2.635. Cash prices at the Transco Z6 hub in New York last traded at $1.70/mmBtu, compared with
Tuesday's range of $1.70 to $2.15.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
June 03, 2015 09:49 ET (13:49 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
060315 13:49 -- GMT
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