Dow Jones - Natural Gas Sinks On Unexpectedly Large Storage Addition

DJ Natural Gas Sinks on Unexpectedly Large Storage Addition


   By Timothy Puko


  Natural gas suffered its biggest losses and had its most volatile trading in more than two weeks after a
larger-than-expected stockpile addition dashed a weather-related rally.

  The U.S. Energy Information Administration said producers added 100 billion cubic feet of natural gas to storage in
the week ended Oct. 9. That is 6 bcf more than the average forecast of 18 analysts and traders surveyed by The Wall
Street Journal.

  Prices for the front-month November contract settled down 6.5 cents, or 2.6%, at $2.453 a million British thermal
units on the New York Mercantile Exchange. It was the largest losses in one day since Oct. 1 and puts gas back to
within 1% of the three-year low it closed at to start the month.

  The losses came from a high starting point as the market had been up more than 2% in trading before the EIA's storage
update. It is the most widely watched measure of short-term supply and demand, and the larger-than-expected addition
would suggest a combination of heavier supply or lighter demand than expected.

  Stockpiles grew to 3.7 trillion cubic feet. That is 4.7% above their five-year average level for this week of the
year and 14% above their level at this time a year ago. Stockpiles could set a record of around 4 trillion cubic feet
heading into the winter heating season, said Jim Ritterbusch, president of energy-advisory firm Ritterbusch &
Associates.

  "That's going to accommodate ... the requirements of even the coldest winters," he said.

  The gains had come from weather forecasts showing unseasonably cold weather spreading almost everywhere east of the
Mississippi River through early next week. Commodity Weather Group LLC's Thursday update shows colder weather than
expected yesterday, maybe as much as 15-degrees-Fahrenheit-below normal from eastern Kentucky through Vermont. It also
shows the cold front spreading across the Deep South, which it didn't show yesterday.

  Half of U.S. homes use natural gas for heating, so cold weather is often the biggest driver for gas demand and
prices. But weather forecasts quickly revert to unseasonably warm temperatures at the end of the month and supplies are
also strong, likely capping any rally, analysts said.

  "Making a case for a significant rally right now seems really tough, other than chasing" out a few people who have
bet on lower prices, said Gene McGillian, an analyst at Tradition Energy.
       FUTURES             SETTLEMENT         NET CHANGE
   Nymex November            $2.453             -6.5c
   Nymex December            $2.686             -4.6c
   Nymex January             $2.831             -4.3c
   CASH HUB                  RANGE            PREVIOUS SESSION
   El Paso Perm           $2.39-$2.43           $2.35-  $2.435
   El Paso SJ             $2.42-$2.435          $2.3525-$2.405
   Henry Hub              $2.48-$2.53           $2.43-  $2.46
   Katy                   $2.43-$2.475          $2.37-  $2.43
   SoCal                  $2.64-$2.71           $2.63-  $2.67
   Tex East M3            $1.45-$1.555          $1.195- $1.27
   Transco 65             $2.46-$2.49           $2.41-  $2.435
   Transco Z6             $2.25-$2.39           $2.37-  $2.40
   Waha                   $2.43-$2.46           $2.36-  $2.39


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


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  (END) Dow Jones Newswires

  October 15, 2015 15:55 ET (19:55 GMT)

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

101515 19:55 -- GMT
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