Dow Jones - Natural Gas Slides On Signs of Oversupply

DJ Natural Gas Slides on Signs of Oversupply


   By Timothy Puko


  Natural gas prices retreated Thursday after storage data suggested the market is still strongly oversupplied.

  Prices for the front-month July contract fell 6.6 cents, or 2.3%, to $2.825 a million British thermal units on the
New York Mercantile Exchange.

  The U.S. Energy Information Administration said storage levels grew by 111 billion cubic feet in the week ended June
5. While that was nearly in line with analysts' 112-bcf expectations, it suggests the market is still oversupplied by
more than 3 bcf a day, according to energy-consulting firm Gelber & Associates in Houston.

  Gas had gone on a 12% run earlier this week as hot weather forecasts suggested rising demand for gas-fired power as
people ramp up their air conditioners. But analysts are pointing to signs that power companies are burning more coal to
work down high stockpiles of a fuel they already bought rather than buy more gas.

  Last week's large addition to gas storage confirms that trend, damping hopes for increasing gas purchases from
utilities, Gelber's Aaron Calder said in a note.

  "This level of oversupply in the market should continue to weigh down front month pricing despite the recent
forecasts of hotter weather," he said.

  The 111-bcf addition brings storage levels to 2.3 trillion cubic feet, 47% more than a year ago and 1.9% above the
five-year average.

  EIA also said on Tuesday that production is likely to keep increasing and set a new monthly record by July.


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


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  (END) Dow Jones Newswires

  June 11, 2015 15:14 ET (19:14 GMT)

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

061115 19:14 -- GMT
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