Natural Gas Retreats On Cooler Weather Forecasts

DJ Natural Gas Retreats on Cooler Weather Forecasts


   By Timothy Puko


  Natural gas is sinking Wednesday morning as weather models are showing a growing consensus in favor of unseasonably
cool weather on the way.

  Natural gas for August delivery is down 4.8 cents, or 1.7%, at $2.784 a million British thermal units on the New York
Mercantile Exchange. Prices are still locked in the 24-cent range they have been trading in for the past three weeks.

  Prices surged higher from losses Tuesday afternoon 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.

  Without hot weather to drive demand for air conditioning, power plants can burn less gas. WeatherBELL Analytics LLC
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.

  Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.775/mmBtu, compared with Tuesday's
range of $2.76-$2.80. Cash prices at the Transco Z6 hub in New York last traded at $1.15/mmBtu, compared with Tuesday's
range of $1.84 to $2.02.


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


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  (END) Dow Jones Newswires

  July 01, 2015 10:06 ET (14:06 GMT)

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