DJ Natural Gas Prices Rises as Storage Addition Falls Below Expectations
By Timothy Puko
Natural gas prices made their biggest one-day gains since June as colder forecasts and a smaller-than-expected
storage addition boosted prices.
Prices for the front-month December contract settled up 10.2 cents, or 4.5%, at $2.364 a million British thermal
units on the New York Mercantile Exchange. It was the biggest one-day percentage gain since June 15.
Gains accelerated after the U.S. Energy Information Administration said producers added 52 billion cubic feet of
natural gas to storage in the week ended Oct. 30. That is 6 bcf less than the average forecast of 17 analysts and
traders surveyed by The Wall Street Journal.
The weekly report is looked to as a leading indicator of supply and demand. A lower-than-expected addition would
suggest that supply was smaller or demand was larger than expectations.
Futures for December delivery recently traded up 6.8 cents, or 3%, at $2.33/mmBtu on the New York Mercantile
Exchange.
"I'm encouraged by the fact that a number came out and surprised people," said John Woods, a Nymex trader who called
himself the last bull in the gas market. "If that doesn't make you think (a rally is possible) then what will?"
Natural gas has foundered in recent weeks with money managers moving into a near-record bearish position. Front-month
prices have plummeted from near $3/mmBtu in August all the way down to nearly $2 when the November contract expired
last week.
A lot of that fall came from the weather, with unseasonably warm forecasts for November damping expectations for
heating demand. Some recent forecasts, though, have shown cooler weather settling in during late November, which has
encouraged buyers in recent days, analysts and traders said.
"It's purely a weather thing," said Marc Kerrest, who manages $1 million at his fund, Cornice Trading LLC, in
California. Mr. Kerrest, however, is betting that those forecasts don't hold and that prices come back down below
$2.30/mmBtu, he said.
While Thursday's data give the market some support, it may be limited. Inventories as of Oct. 30 surpassed 3.9
trillion cubic feet, 10% above levels from a year ago and 3.9% above the five-year average for the same week.
The high stockpiles are still nearing a record. And warm weather forecasts suggest heating demand may be limited this
winter.
"Supply seems so plentiful," said Peter Donovan, broker for Liquidity Energy LLC in New York. "Without weather, (gas)
is a goner."
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
November 05, 2015 15:30 ET (20:30 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
110515 20:30 -- GMT
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