Dow Jones - Natural Gas Gains On Smaller Than Expected Stockpile Addition

DJ Natural Gas Gains on Smaller-Than-Expected Stockpile Addition


   By Timothy Puko


  Natural gas prices made a small, sharp move higher Thursday to near a one-week high after last week's storage
addition turned out to be slightly smaller than expected.

  Prices for the front-month November contract settled up 2.4 cents, or 1%, at $2.498 a million British thermal units
on the New York Mercantile Exchange. Even with four winning sessions out of five, gas is up just 2.7% from the
three-year low settlement it hit Oct. 1.

  The U.S. Energy Information Administration said producers added 95 billion cubic feet of natural gas to storage in
the week ended Sept. 25. That is 3 bcf lower than the average forecast of 17 analysts and traders surveyed by The Wall
Street Journal. Many consider that only a slight miss, and the small rally quickly deflated.

  The EIA update is widely considered one of the best measures of supply and demand for the natural gas market. The
lower-than-expected addition to stockpiles would suggest slightly larger demand or smaller supply than expected.

  "A lot of guys were saying 95, so it's nothing way out of the range," said Scott Gettleman, an independent trader in
New York. "It looks like the market wants to pick its head up and rally a little bit. It's been beaten down pretty
good."

  Most traders and analysts are chalking up recent gains to chart-focused, technical traders who are buying in hopes
the recent historical lows will mark a bottom for the current fall. Others were trying to get ahead of a large group of
bearish traders that has swarmed the market and will eventually have to buy back contracts to close out trades and take
profits from the recent fall.

  Government and bank forecasters and analysts are increasingly saying prices have little reason to rise because the
winter is likely to bring mild weather and tepid heating demand. That could keep these large additions going through
next month, which has put downward pressure on prices.

  "The rally has been primarily driven by the technical oversold state of the market," Dominick Chirichella, analyst at
the Energy Management Institute, said in a note.


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


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  (END) Dow Jones Newswires

  October 08, 2015 14:53 ET (18:53 GMT)

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

100815 18:53 -- GMT
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