Natural Gas Gains Ahead of Inventory Data

DJ Natural Gas Gains Ahead of Inventory Data


By Timothy Puko


  Natural-gas prices are rising Thursday as traders expect a rare below-average addition to stockpiles.

  Natural gas for July delivery is up 5 cents, or 1.8%, at $2.833 a million British thermal units on the New York
Mercantile Exchange. It was seeing some of the largest gains of all commodities on a day when new employment data
showed that job gains and layoffs were painting a more disappointing picture about the U.S. economy than experts
expected.

  Gas futures often ignore macroeconomic trends, which seemed to be the case Thursday. Analysts said it was likely
reacting to expectations that a chronic oversupply could be easing.

  Analysts and traders surveyed by The Wall Street Journal expect that natural-gas stockpiles grew by 71 billion cubic
feet in the week. That is less than the five-year average for that week, an increase of 75 bcf, and far below the
102-bcf producers added to stockpiles during the same week a year ago.

  The U.S. Energy Information Administration has scheduled its official update on storage levels for 10:30 a.m. EDT. It
is widely viewed as a prime measure of the balance between supply and demand.

  Stockpile additions have routinely been larger-than-average during the past 12 months as the U.S. oil-and-gas boom
has kept production surging. But a 40% fall in energy prices since last June has encouraged drillers to cut back. This
could be the second-straight below-average addition to stockpiles, which could point to a trend, said Bob Yawger,
director of the futures division at Mizuho Securities USA Inc.

  "It looks like the (production) pace has slowed down," he said. "Natural gas: looking pretty good this morning."

  Prices have, however, fallen in recent sessions as many expect oversupply to continue. Mild weather forecasts have
some expecting soft demand for gas-fired power to run air conditioners, and there are also signs that production is
still coming strong.

  The EIA 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.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.7875/mmBtu, compared with
Wednesday's range of $2.775-$2.835. Cash prices at the Transco Z6 hub in New last traded at 85 cents an mmBtu, compared
with Wednesday's range of $1.15 to $1.50.


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


Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>

  (END) Dow Jones Newswires

  July 02, 2015 09:38 ET (13:38 GMT)

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

070215 13:38 -- GMT
------