DJ Natural Gas Sinks on Heavy Production
By Timothy Puko
Natural gas is taking strong losses as heavy production has kept a damper on prices in extended trading that includes
a limited holiday session from Friday.
Prices for the front-month August contract fell six cents, or 2.1%, to $2.7161 a million British thermal units on the
New York Mercantile Exchange. Most of the session's losses came Friday, with prices nearly unchanged since electronic
trading reopened Sunday evening.
Late Thursday, the U.S. Energy Information Administration warned that record production from several states in the
middle of the shale-drilling boom had the potential to bring hub prices down even further. Much of the new production
coming from eastern states including Pennsylvania, Ohio and West Virginia is still trapped by pipeline bottlenecks, but
a series of new pipelines is going to be carrying that production out of the region soon.
Many regional spot prices there fell near to $1/mmBtu last week, less than half of the national benchmark. Even
prices in New York, a large market that long paid a premium, fell to a record low $1.24/mmBtu, and then fell again,
trading as low as 65 cents on Thursday. The low prices suggest that as more pipelines take gas out of that region,
prices at the benchmark hub in Louisiana will fall in line, EIA said.
The EIA had said earlier last week that production hit 74.63 bcf in April, just shy of the 74.69 bcf record set in
December.
"There's still a lot of gas out there, so that's going to prevent us from running above $3," said John Woods,
president of JJ Woods Associates and a Nymex trader.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.74/mmBtu, compared with Thursday's
range of $2.77-$2.88. Cash prices at the Transco Z6 hub in New York last traded at $2.00/mmBtu, compared with
Thursday's range of $0.65 to $1.00.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
July 06, 2015 09:50 ET (13:50 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
070615 13:50 -- GMT
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