Dow Jones - Natural Gas Retreats On Cooler Weather Forecasts

DJ Natural Gas Retreats on Cooler Weather Forecasts

By Timothy Puko

     Natural gas sank Wednesday after weather models showed a growing consensus in favor of unseasonably cool weather
on the way, a likely precursor to soft demand.

     Prices for the front-month August contract settled down 4.9 cents, or 1.7%, to $2.783 a million British thermal
units on the New York Mercantile Exchange. Prices are still locked in the 17-cent range they have settled in for the
past three weeks.

     Prices had surged Tuesday afternoon, reversing losses, after the most widely watched U.S. government forecast
showed a trough of cool air hitting farther east than originally expected, creating hotter forecasts. But that model's
Wednesday-morning update brought it more in line with other models that suggest cooler weather.

     "Whoever bough it yesterday, bought it right at the high point," said Santiago Diaz, a broker at INTL FCStone
Latin America in Miami.

     Without hot weather to drive demand for air conditioning, power plants can burn less gas. WeatherBELL Analytics
LLC called Tuesday's forecast an "abomination" and said a "major cold shot" is "still on the table" for next week. Many
forecasts are showing below-normal temperatures spreading from the Great Plains to the Mid-Atlantic region.

     "When they take the heat away, they're going to take away the momentum of the market," said Phil Flynn, senior
market analyst at the Price Futures Group in Chicago.

     That is especially true because production is still at a near-record pace. The U.S. Energy Information
Administration late Tuesday raised its estimates for production during the first three months of the year. It reversed
prior estimates that said monthly production growth ended in March. It now says production has increased every month
since January, hitting 74.63 bcf in April, just shy of the 74.69 record set in December.

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


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  July 01, 2015 15:02 ET (19:02 GMT)

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