DJ Natural Gas Prices Rise on Warming Weather, Falling Production
By Timothy Puko
Natural gas prices bounced back from a three-week low Monday as warming weather and falling supply show signs the
market could be slowly balancing.
Natural-gas futures for August delivery recently gained 1.9 cents, or 0.7%, to $2.735 a million British thermal units
on the New York Mercantile Exchange. The boost puts gas back to the middle of the 31 cent trading range it has been in
since June 9.
Part of the gain comes from weather forecasts that are now retreating from predictions of widespread below-normal
temperatures for this week. In the summer, hot weather can lead to stronger demand for gas-fired power to run air
conditioners.
A hot spring has already led power plants to consume their second-highest amount of natural gas ever for the month of
May, the U.S. Energy Information Administration said late Friday. It reported that gas deliveries to power plants hit
23.7 billion cubic feet a day that month, nearly 14% more than May 2014.
The agency's "Natural Gas Monthly" also showed the country's production hit just 73.6 bcf in May, more than 1 bcf
less than expected and down 1 bcf from April production. That included "big declines" from several states that have led
that ongoing oil-and-gas boom and is "the cornerstone to our more bullish" estimate of $4 gas on the way in the months
to come, Tudor, Pickering, Holt & Co., a Houston investment bank, said in a note.
"With the lower prices you have to expect production to get cut," said Scott Gettleman, an independent trader in New
York. "So a combination of hotter weather and less production is going to result in a rally."
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.75/mmBtu, compared with Friday's
range of $2.735-$2.78. Cash prices at the Transco Z6 hub in New York traded in a bid-ask range of $2.65/mmBtu to
$2.75/mmBtu, compared with Friday's range of $2.10-$2.40.
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
August 03, 2015 10:03 ET (14:03 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
080315 14:03 -- GMT
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