Dow Jones - Natural Gas Slips Further As Weekly Storage Data Suggests Oversupply

DJ Natural Gas Slips Further As Weekly Storage Data Suggests Oversupply


  By Timothy Puko


  Natural gas prices on Thursday fell to their lowest settlement this week, cancelling out most of their early-week
gains, as concerns about weather have subsided.

  Prices for the front-month July contract settled down 7.8 cents, or 1.4%, to $2.77 a million British thermal units on
the New York Mercantile Exchange. It was the largest one-day percentage loss in three weeks.

  Prices had gone on a run earlier this week largely based on weather. Forecasts for a hot June have some expecting
strong demand for gas-fired power to run air conditioners. A tropical storm that hit Texas has some worried that rains,
wind and flooding could threaten wells and processing plants in the region.

  But national forecasts turned slightly cooler on Thursday. Perhaps more importantly, production has shown no impact
from the storm that made landfall in Texas this week, a combination of factors likely to keep weekly surpluses healthy,
Dominick Chirichella, analyst at the Energy Management Institute, said in a note. "We'll get a pop on weather, and then
slowly drift back down as the market realizes the weather just isn't strong enough to hold us up," said Aaron Calder,
senior market analyst at energy-consulting firm Gelber & Associates in Houston.

  The storm is more likely to keep the market oversupplied, as it drops rain on large parts of the country and reduces
the need for air conditioning in the coming days, Mr. Calder said.

  Data from the U.S. Energy Information Administration on Thursday suggested the market is oversupplied. Storage levels
grew by 89 billion cubic feet in the week ended June 5. That is 4 bcf less than the 93-bcf average of forecasters
surveyed by The Wall Street Journal, but it still shows oversupply was likely about 1 bcf a day, according to
calculations earlier from Tudor, Pickering, Holt & Co., a Houston investment bank.

  The EIA update is widely considered one of the best measures of supply and demand for the natural gas market. It
would have needed to shows signs of much stronger demand or lower supply for bullish traders to justify their positions
after bidding up the market strongly to start the week, said John Woods, president of JJ Woods Associates and a Nymex
trader.

  "It's not supplementing their trading strategy," he added. "They were just expecting more juice from this number."

  The 89-bcf addition brings storage levels to 2.4 trillion cubic feet, 43% more than a year ago and 1.9% above the
five-year average.

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

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  (END) Dow Jones Newswires

  June 18, 2015 14:47 ET (18:47 GMT)

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

061815 18:47 -- GMT
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