Dow Jones - Natural Gas Falls Following Spot Prices Lower

DJ Natural Gas Falls, Following Spot Prices Lower


   By Timothy Puko


  Natural gas futures are falling as weak regional prices and temperate weather forecasts weigh on the market.

  Natural gas for July delivery fell 4.8 cents, or 1.7%, to $2.708 a million British thermal units on the New York
Mercantile Exchange. The losses keep gas in the middle of the 55-cent trading range it has been locked in for more than
two months.

  Cash prices at many points around the country are coming off of record lows from last week, but haven't surged above
futures prices. Pipeline bottlenecks are trapping an oversupply of gas in regional markets. Power plants also burned
less gas in recent days, possibly because of the slower holiday weekend, said John Saucer, vice president of research
and analysis at Mobius Risk Group in Houston. And weather forecasts are showing widespread below-normal temperatures in
the coming days, which may limit the use of air conditioners and demand for gas-fired power to run them in the days to
come.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.73/mmBtu, compared with Monday's
range of $2.7225-$2.75. Cash prices at the Transco Z6 hub in New York last traded at $2.60/mmBtu, compared with
Monday's range of $1.94 to $2.65.

  "It's looking looser, sloppier, weaker than where we were a week ago," Mr. Saucer said.

  Production has been strong this year--holding near record highs despite cutbacks that have led to a record-low number
of working gas drilling rigs--that Jefferies LLC cut its price outlook. The bank's analysts also cited expectations for
a disappointing amount of exports.

  They cut their 2015 forecast to $3.00/mmBtu from $3.50 and cut their 2016 forecast to $4.00 from $4.25. That is still
higher than long-term futures prices. The Jefferies analysts said they are ultimately still bullish because they expect
production growth will have to slow down while new pipelines get built and because demand for gas-fired power will
increase.


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


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  (END) Dow Jones Newswires

  July 07, 2015 10:11 ET (14:11 GMT)

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

070715 14:11 -- GMT
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