DJ Natural Gas Prices Rebounds After Setting New One-Month Low
By Timothy Puko
Natural gas prices rebounded on Thursday, gaining after falling earlier to a fresh one-month low.
Bearish traders who have dominated the market may be taking profits by buying and bidding up the price, after weekly
government storage data was published, a broker and analyst said.
Prices dipped after the U.S. Energy Information Administration update at 10:30 a.m., EDT, said storage levels grew by
91 billion cubic feet, larger than the expected and average additions, in the week ended July 3. The five-year average
addition for that week was 75 bcf.
Forecasters surveyed by The Wall Street Journal had a median expectation of 85 bcf. The heavy surplus would indicate
the market is oversupplied and by more than most had expected.
But with that inventory news out of the way, traders who bet on a fall in prices may have been closing out their
bets. In addition to profit-taking, they might think some of the addition to inventories resulted from low business
activity and consumption during the Independence Day holiday, and they might not want to hold on to bearish bets as a
full week of open businesses and factories could well lead to lower stock levels in next week's update, said Aaron
Calder, senior market analyst at energy-consulting firm Gelber & Associates in Houston. "It might be some short traders
getting a little over-exuberant in getting out of their positions," he said.
The front-month August contract recently traded up 2 cents, or 0.7%, to $2.705 a million British thermal units on
the New York Mercantile Exchange. The gas price dropped to as low as $2.644/mmBtu immediately after the EIA update and
has steadily risen since then.
Last week's heavy addition to inventories shows natural-gas production is ramping back up toward a record-pace after
some recent setbacks and that demand isn't there to absorb it, said Jim Ritterbusch, president of energy-advisory firm
Ritterbusch & Associates.
Residential and commercial demand has shrunk this year and industrial demand is nearly flat, according to the EIA. A
sluggish industrial sector and last week's holiday helped create last week's larger-than-expected surplus, Mr.
Ritterbusch said. "That industrial demand really didn't come in as strongly as a lot of people had expected," he added.
The 91-bcf addition brings gas storage levels to 2.7 trillion cubic feet, 33% more than a year ago and 1.7% above the
five-year average.
(MORE TO FOLLOW) Dow Jones Newswires
July 09, 2015 13:29 ET (17:29 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
070915 17:29 -- GMT
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