DJ Natural Gas Rising on Hotter Weather Forecasts
By Timothy Puko
Natural-gas futures are rising to a one-week high as hotter weather forecasts continue to suggest stronger demand on
the way.
Natural gas for July delivery rose 10.1 cents, or 3.7%, to $2.806 a million British thermal units on the New York
Mercantile Exchange. The market is poised to make its largest back-to-back gains since the end of April, which became
the starting point for a three-week rally.
Weather forecasts grew incrementally warmer for the second-straight day. Commodity Weather Group LLC in Bethesda,
Md., is forecasting 90-degree-Fahernheit temperatures for the Mid-Atlantic region, which would be its hottest weather
of the season. Part of California also cracked 100 degrees on Monday.
Hot weather gets people to turn on their air conditioners and power plants burn more gas to meet the demand. Some
traders have become concerned prices have fallen too far for early June, when there is still a chance ahead for a long,
hot summer to ramp up demand.
"You can make a pretty good argument for the upside," said Bob Yawger, director of the futures division at Mizuho
Securities USA Inc. "The temperature seems to tick tick tick higher and higher."
The forecasts come a few days after the largest buildup of bearish traders in gas since the financial crisis. There
were more bearish positions on gas at June 2 than at any time since 2008, according to regulatory data.
The warm forecasts could be enough to scare some of them into quickly unwinding pre-existing bets that profit when
the market falls, analysts and brokers said. Such trades are closed out by buying futures to cover the position, which
can feed into a price rally when it is done in large numbers at the same time.
The market could also be reacting to signs that natural gas production has peaked after long stretch of rampant
growth, Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, said in a note. New data the U.S.
Energy Information Administration released Monday suggested significant output declines coming from major
shale-drilling areas next month, easing fears record output could overwhelm the country's natural gas storage system
before the start of the winter-heating season, he said.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.82/mmBtu, compared with Monday's
range of $2.625 to $2.75. Cash prices at the Transco Z6 hub in New York last traded at $2.99/mmBtu, compared with
Monday's range of $2.57 to $2.83.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
June 09, 2015 09:29 ET (13:29 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
060915 13:29 -- GMT
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