DJ Natural Gas Surges to June's Intraday High
By Timothy Puko
Natural gas surged to its highest intraday price in nearly a month as floor trading opened on Wednesday, possibly from hot weather and plateauing production cutting into the bearish sentiment that has weighed down the market.
Natural gas for July delivery is up 5.2 cents, or 1.8%, at $2.946 a million British thermal units on the New York
Mercantile Exchange. Prices peaked at $2.947/mmBtu just after 9:30 a.m. ET, their highest intraday point since May 22.
Several analysts and brokers were unclear exactly what led gas to flip from small losses. Prices moved 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.
"Any time you see this kind of rise this time of year, the first thing you think of is the summer weather forecast,"said Kent Bayazitoglu, analyst at energy-consulting firm Gelber & Associates in Houston.
With the summer still ahead, there is a lot of uncertainty, several traders have said. The possibility of a prolonged heat wave and a surge of demand to run air conditioners has some bidding up the price even though supplies are ample.
But Mr. Bayazitoglu and others also said traders may be reevaluating how ample that supply is. Consultancy Energy
Aspects on Tuesday joined several other analysts and money managers in saying monthly production may have peaked in recent months at 73 billion cubic feet a day, and could be in a decline. While production is still near a record pace, low prices in both oil and gas are likely causing enough cutbacks among producers to end a period of rampant growth.
"All these little factors are starting to chip in and the market is losing its bearishness," said Frank Clements, co-owner of Meridian Energy Brokers Inc. outside New York. "Every time we dip down now...it looks like somebody steps in and buys it."
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.9475/mmBtu, compared with Tuesday's range of $2.86-$2.95. Cash prices at the Transco Z6 hub in New York last traded at $2.90/mmBtu, compared with Tuesday's range of $3.00 to $3.10.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
June 17, 2015 10:06 ET (14:06 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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