DJ Natural Gas Gains on Smaller-Than-Expected Surplus
By Timothy Puko
Natural gas added to gains Thursday after a smaller-than-expected stockpile addition.
The U.S. Energy Information Administration said producers added 63 billion cubic feet of natural gas to storage in
the week ended Oct. 23. That is 5 bcf less than the average forecast of 22 analysts and traders surveyed by The Wall
Street Journal.
Natural gas for December delivery is up 5.3 cents, or 2.3%, at $2.351 a million British thermal units on the New York
Mercantile Exchange. December prices are usually higher because of the winter, and the new contract's bounce ends what
had been an 18% fall over six sessions.
The smaller-than-expected weekly surplus adds ammunition for bulls who think the oversupplied market could come into
a better balance by winter. Natural gas is used as the primary heating fuel in about half of U.S. households, and
prices can rise rapidly when extreme weather comes.
"You are going to have weather. It's inevitable," said John Woods, president of JJ Woods Associates and a Nymex
trader.
Stockpiles grew to 3.9 trillion cubic feet. That is 4.1% above their five-year average level for this week of the
year and 12% above their level at this time a year ago. At this pace, the market could set a record of around 4
trillion cubic feet heading into the winter heating season, analysts have said.
Those heavy stockpiles have played a large role in the recent descent of gas. Many forecasters are predicting a
warmer-than-normal winter, and tepid demand could leave an unprecedented glut heading into the spring.
November is likely off to a warm start, too, according to weather reports that show above-average temperatures
widespread--most predicting they will cover half the country or more. Those have changed little since Wednesday, though
Commodity Weather Group is now showing an expanded peak next week, with temperatures as much as 15-degrees-Fahrenheit
above normal from Mexico to New England.
That is likely to keep weighing on prices, brokers and analysts have said. Donald Morton, senior vice president at
Herbert J. Sims & Co., said the market rally Thursday is likely temporary.
"We've been pounded...so it's entitled to a burp. That's all it is," Mr. Morton said.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.14/mmBtu, compared with
Wednesday's range of $2.07-$2.13. Cash prices at the Transco Z6 hub in New York last traded at $2.07/mmBtu, compared
with Wednesday's range of $2.09 to $2.15.
Write to Timothy Puko at
tim.puko@wsj.com
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(END) Dow Jones Newswires
October 29, 2015 11:03 ET (15:03 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
102915 15:03 -- GMT
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