Dow Jones - Natural Gas Slips Slightly On Weather

DJ Natural Gas Slips Slightly on Weather



  By Timothy Puko


  Natural gas prices lost some ground Thursday as traders pulled back from assumptions that weather could help tighten
an oversupplied market.

  Natural gas for July delivery is down 1 cent, or 0.4%, at $2.845 a million British thermal units on the New York
Mercantile Exchange. Trading has stayed within a 5-cent range, a tight range common ahead of the U.S. Energy
Information Administration's weekly update on storage levels, scheduled for 10:30 a.m. ET.

  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 Thursday. And, maybe more importantly, production has shown no impact
from the storm making landfall in Texas, a combination of factors likely to keep weekly surpluses healthy, Dominick
Chirichella, analyst at the Energy Management Institute, said in a note.

  Today's update from the EIA is likely to show that storage levels grew by 93 billion cubic feet, according to the
average of 16 forecasters surveyed by The Wall Street Journal. That is less than the 112 bcf added to storage for the
same week last year but closer to the 87-bcf five-year average addition for that week.

  That suggests oversupply hit about 1 bcf a day last week, according to Tudor, Pickering, Holt & Co., a Houston
investment bank. That is on the decline 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 $2.86/mmBtu, compared with
Wednesday's range of $2.91-$2.95. Cash prices at the Transco Z6 hub in New York last traded at $2.70/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 10:00 ET (14:00 GMT)

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

061815 14:00 -- GMT
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