DJ Natural Gas Slips Further After Weekly Storage Data Nearly Matches Expectations
By Timothy Puko
Natural gas prices were ticking further down after federal data showed a weekly stockpile addition within 5% of
expectations.
The U.S. Energy Information Administration said 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.
The EIA update is widely considered one of the best measures of supply and demand for the natural gas market. This
draw would indicate slightly lower supply or larger demand than expected, although the difference is likely relatively
small.
The front-month July contract recently traded down 1.8 cents, or 0.6%, at $2.837 a million British thermal units on
the New York Mercantile Exchange. It had been even closer to unchanged ahead the update, and briefly moved to small
gains afterwards before retreating.
Prices are still up nearly 3.2% for the week from gains on Monday, and that has probably tempered enthusiasm today,
said John Woods, president of JJ Woods Associates and a Nymex trader. Without a bigger miss from expectations, many of
those traders who bet on rising prices will start to bail out, figuring the rally has little room left to run, Mr.
Woods said.
"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. Tudor, Pickering, Holt & Co., a Houston investment bank had said earlier Thursday that an addition
of about this size would suggest the market was oversupplied by 1 bcf a day last week, down from more than 3 bcf a day
in recent weeks. It could be a positive sign for prices heading into the summer, when hot weather usually leads to
increasing demand for gas-fired power to run air conditioners, the bank said.
"Still out of balance but moving in the right direction," Tudor, Pickering said in its Thursday note. "Remember
balancing market on the back of power generation demand becomes significantly easier as overall power demand increases
through the summer months."
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.8425/mmBtu, compared with
Wednesday's range of $2.91-$2.95. Cash prices at the Transco Z6 hub in New York last traded at $2.75/mmBtu, compared
with Wednesday's range of $2.50 to $3.03.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
June 18, 2015 11:05 ET (15:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
061815 15:05 -- GMT
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