DJ Natural Gas Dips Below All-time Inflation-Adjusted Low
By Timothy Puko
Natural gas prices dipped below their lowest ever price inflation-adjusted Nymex trading on Wednesday as extremely
warm weather continues to limit demand.
Futures for January delivery recently traded down 0.7 cents, or 0.4%, at $1.815 a million British thermal units on
the New York Mercantile Exchange. Prices fell to as low as $1.778/mmBtu in early morning trading before paring losses.
The inflation-adjusted record low is $1.80/mmBtu, reached in January 1992.
Warm weather in the U.S. caused by the El Nino weather phenomenon has sharply limited demand for the heating fuel
this year. The natural-gas market is oversupplied, and some traders and analysts say the industry could run out of
storage space for gas by mid-2016.
Forecasts grew even warmer Wednesday. MDA Weather Services and Commodity Weather Group show temperatures more than
15-degrees-Fahrenheit-above-normal that had been forecast for the Great Lakes region next week now spreading to cover
nearly the entire East Coast and the south from Atlanta to San Antonio. Commodity Weather Group has been predicting a
high of 70 degrees for New York on Christmas Eve.
With weather so warm and prices already so low, there may be no lower price gas can fall to to draw more demand, said
Scott Shelton, broker at ICAP PLC. That means prices have to fall so far that producers stop working.
But many have been caught in a cycle of debt, forced to keep producing even at a loss just to bring new revenue in
the door that they can use to pay the debt bills that piled up from using loans to fuel their growth during the
drilling boom. It is not yet clear how far prices would have to fall to get them to stop, Mr. Shelton said.
"This market is in real trouble," Mr. Shelton said. "Just wait for the bankruptcies."
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $1.66/mmBtu, compared with Tuesday's
range of $1.62-$1.67. Cash prices at the Transco Z6 hub in New York last traded at $1.55/mmBtu, compared with Tuesday's
range of $1.65-$1.74.
Write to Timothy Puko at tim.puko@wsj.com
(END) Dow Jones Newswires
December 16, 2015 10:16 ET (15:16 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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