Natural gas prices fell by nearly 10% in today's session as the spot November 15 contract gapped lower on the open and fell sharply throughout the session.
Losses for the day amounted to .224 as the November contract bottomed out at a $2.050/MMBtu low, the lowest spot price level since April 2012.
Reasons for today's weakness are the same, little weather-related demand for natural gas and domestic storage which is expected to reach a new all-time high later this year.
Today's 6-10 and 8-14 day National Weather Service forecasts only added to the negative outlook with near term and longer range forecasts into December predicting above-normal temperatures across much of the country.
Current storage of 3,733 Bcf (billion cubic feet) should top the 3,929 Bcf peak storage high reached in 2012. If the weather outlook is correct, the market could see continued storage injections during the month of November possibly pushing storage above the 4,000 Bcf mark for the first time ever.
One factor that is not being discussed but which has been discussed in much depth on Natural Gas Corner is the drop in U.S. production. Production has fallen from the December 2014 high of 74.3 Bcf per day (dry-gas) to 70.8 Bcf per day counter to forecasts by the EIA for a rise. If production continues to fall, it could become an unexpectedly bullish factor for the market.
At the present time, all focus is on storage and lack of weather-related demand. The April 2012 low of $1.902/MMBtu is the next technical objective for the market.
natural gas
Monday, October 26, 2015
Dow Jones - Natural Gas Market Goes Cold
DJ Natural-Gas Market Goes Cold
By Nicole Friedman
NEW YORK--The benchmark U.S. natural-gas price tumbled to its biggest one-day decline since February 2014 on
expectations of a deepening supply glut.
Forecasts for warm fall weather across swaths of the U.S. spurred the nearly 10% plunge on Monday. Above-average
temperatures at the start of heating season will undercut seasonal demand, analysts say, boosting stockpiles that
already are near record highs.
"The market is now in absolute free fall," said Stephen Schork, editor of energy-trading newsletter The Schork
Report. "There's no real strong forecast for any weather-[related] demand in the near future."
The North American natural-gas market has been mired in a supply glut for years amid robust output. Companies
continue to grow more efficient at extracting the fuel from shale rocks in Pennsylvania, Texas and elsewhere, and
they're able to maintain production even as gas prices plumb three-year lows.
But Monday's selloff nevertheless is another blow to energy producers, which now must grapple with falling
natural-gas prices in addition to low oil prices. Producers have struggled with persistently low gas prices for years
and are now seeing additional threats to their earnings due to the past year's plunge in oil prices.
Many global commodity markets have suffered from high supplies and concerns about demand, as years of investments
in new production collided with slower-than-expected economic growth. Energy producers have sharply cut spending on new
drilling this year in response, but many analysts and investors expect both oil and natural-gas prices to remain low
through the end of 2015 and into 2016 as large inventories continue to pressure the market.
However, households and industrial consumers will continue to benefit as natural-gas prices continue to drop.
About half of U.S. households use natural gas as their main heating fuel.
November natural gas slid 22.4 cents, or 9.8%, to $2.062 on the New York Mercantile Exchange, the lowest close
since April 2012 and the largest one-day percentage drop in 20 months.
Natural-gas prices typically rise ahead of the winter as colder weather sparks indoor-heating demand. But weather
forecasts released Sunday night called for warmer-than-average temperatures in the next two weeks. Meteorologists
widely expect moderate temperatures to persist through at least the first half of the winter due to El Ni??o, a
weather phenomenon that tends to upend temperature and precipitation pattern world-wide.
Natural-gas inventories usually rise through the last week of October as producers store gas ahead of the winter
season, when demand is highest. But analysts say producers could keep adding to storage into November this year,
sparking concerns that storage facilities could near capacity if inventories continue to rise.
As of Oct. 16, inventories stood at 3.814 trillion cubic feet, 4.5% above the five-year average level for that
time of year.
Mr. Schork, who added to his bets on lower natural-gas prices last week, said he sees an 87% chance that
stockpiles hit a record by the end of October.
Write to Nicole Friedman at nicole.friedman@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
October 26, 2015 15:57 ET (19:57 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
102615 19:57 -- GMT
------
By Nicole Friedman
NEW YORK--The benchmark U.S. natural-gas price tumbled to its biggest one-day decline since February 2014 on
expectations of a deepening supply glut.
Forecasts for warm fall weather across swaths of the U.S. spurred the nearly 10% plunge on Monday. Above-average
temperatures at the start of heating season will undercut seasonal demand, analysts say, boosting stockpiles that
already are near record highs.
"The market is now in absolute free fall," said Stephen Schork, editor of energy-trading newsletter The Schork
Report. "There's no real strong forecast for any weather-[related] demand in the near future."
The North American natural-gas market has been mired in a supply glut for years amid robust output. Companies
continue to grow more efficient at extracting the fuel from shale rocks in Pennsylvania, Texas and elsewhere, and
they're able to maintain production even as gas prices plumb three-year lows.
But Monday's selloff nevertheless is another blow to energy producers, which now must grapple with falling
natural-gas prices in addition to low oil prices. Producers have struggled with persistently low gas prices for years
and are now seeing additional threats to their earnings due to the past year's plunge in oil prices.
Many global commodity markets have suffered from high supplies and concerns about demand, as years of investments
in new production collided with slower-than-expected economic growth. Energy producers have sharply cut spending on new
drilling this year in response, but many analysts and investors expect both oil and natural-gas prices to remain low
through the end of 2015 and into 2016 as large inventories continue to pressure the market.
However, households and industrial consumers will continue to benefit as natural-gas prices continue to drop.
About half of U.S. households use natural gas as their main heating fuel.
November natural gas slid 22.4 cents, or 9.8%, to $2.062 on the New York Mercantile Exchange, the lowest close
since April 2012 and the largest one-day percentage drop in 20 months.
Natural-gas prices typically rise ahead of the winter as colder weather sparks indoor-heating demand. But weather
forecasts released Sunday night called for warmer-than-average temperatures in the next two weeks. Meteorologists
widely expect moderate temperatures to persist through at least the first half of the winter due to El Ni??o, a
weather phenomenon that tends to upend temperature and precipitation pattern world-wide.
Natural-gas inventories usually rise through the last week of October as producers store gas ahead of the winter
season, when demand is highest. But analysts say producers could keep adding to storage into November this year,
sparking concerns that storage facilities could near capacity if inventories continue to rise.
As of Oct. 16, inventories stood at 3.814 trillion cubic feet, 4.5% above the five-year average level for that
time of year.
Mr. Schork, who added to his bets on lower natural-gas prices last week, said he sees an 87% chance that
stockpiles hit a record by the end of October.
Write to Nicole Friedman at nicole.friedman@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
October 26, 2015 15:57 ET (19:57 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
102615 19:57 -- GMT
------
Natural Gas Corner - Long Term Technical Update
The natural gas market is in a near free fall in today’s
trade after gapping under 2.230-2.250 support in the overnight session.
The weekly natural gas chart shows the new price low set
today at the 2.057 level. In
addition to 2.230-2.250 support, 2.160-2.170
weekly low support from June 2012 was also broken in today’s session.
The next longer term support now becomes the 1.902 low from
April 2012 shown in red.
Former support areas now become resistance the first level
being 2.160-2.170 followed by the open gap created today between
2.238-2.275.
Current weakness should be the final sell off before a
seasonal low in the market is set.
Dow Jones - Warm Fall Weather Sends Natural Gas Sliding
DJ Warm Fall Weather Sends Natural Gas Sliding
By Nicole Friedman
NEW YORK--Natural-gas prices slumped Monday after weather forecasts called for warmer-than-average temperatures in
the next two weeks, curbing investors' expectations for the nation's heating demand.
November natural gas recently slid 10.9 cents, or 4.8%, to $2.177 a million British thermal units. Futures traded at
their lowest intraday levels since June 2012 and are on track for their biggest daily decline since August.
Cold weather fuels demand for natural gas, which is the main heating fuel in about half of all U.S. households.
However, a mild autumn has kept a lid on consumption, a trend that is expected to persist. Some analysts expect that El
Ni??o, a weather phenomenon that tends to upend temperature and precipitation pattern world-wide, will cause a mild
winter in the U.S. this year.
Weather forecasts released Sunday night called for "significant warm trends" across much of the U.S. in the next two
weeks, according to MDA Weather Services.
"The main driver for the new round of selling has been the latest...temperature forecasts, which are now projecting
above-normal temperatures across most of the U.S. into the second week of November," said Dominick Chirichella, analyst
at the Energy Management Institute, in a note. "The new warming trend will mitigate most heating-related demand for the
next several weeks."
The North American natural-gas market has been mired in a supply glut for years amid robust output. As of Oct. 16,
inventories stood 4.5% above the five-year average level for that time of year. Some analysts have warned that storage
facilities could near capacity if inventories continue to rise.
"Mild weather forecasts for early winter will add stress to already-surplus storage levels," said Morgan Stanley in a
note.
Bank of America Merrill Lynch cut its natural-gas forecast for the end of 2015 to $3/MMBtu from $3.50/MMBtu. The bank
now expects prices to average $2.70/MMBtu in the fourth quarter, down from its previous forecast of $3.20/MMBtu.
"A warm winter is the last thing this market needs," the bank said in a note to clients.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.135/mmBtu, compared with Friday's
range of $2.24-$2.285. Cash prices at the Transco Z6 hub in New York last traded between $1.95 and $2.30/mmBtu,
compared with Friday's range of $2.08-$2.15.
Write to Nicole Friedman at nicole.friedman@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
October 26, 2015 10:39 ET (14:39 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
102615 14:39 -- GMT
------
By Nicole Friedman
NEW YORK--Natural-gas prices slumped Monday after weather forecasts called for warmer-than-average temperatures in
the next two weeks, curbing investors' expectations for the nation's heating demand.
November natural gas recently slid 10.9 cents, or 4.8%, to $2.177 a million British thermal units. Futures traded at
their lowest intraday levels since June 2012 and are on track for their biggest daily decline since August.
Cold weather fuels demand for natural gas, which is the main heating fuel in about half of all U.S. households.
However, a mild autumn has kept a lid on consumption, a trend that is expected to persist. Some analysts expect that El
Ni??o, a weather phenomenon that tends to upend temperature and precipitation pattern world-wide, will cause a mild
winter in the U.S. this year.
Weather forecasts released Sunday night called for "significant warm trends" across much of the U.S. in the next two
weeks, according to MDA Weather Services.
"The main driver for the new round of selling has been the latest...temperature forecasts, which are now projecting
above-normal temperatures across most of the U.S. into the second week of November," said Dominick Chirichella, analyst
at the Energy Management Institute, in a note. "The new warming trend will mitigate most heating-related demand for the
next several weeks."
The North American natural-gas market has been mired in a supply glut for years amid robust output. As of Oct. 16,
inventories stood 4.5% above the five-year average level for that time of year. Some analysts have warned that storage
facilities could near capacity if inventories continue to rise.
"Mild weather forecasts for early winter will add stress to already-surplus storage levels," said Morgan Stanley in a
note.
Bank of America Merrill Lynch cut its natural-gas forecast for the end of 2015 to $3/MMBtu from $3.50/MMBtu. The bank
now expects prices to average $2.70/MMBtu in the fourth quarter, down from its previous forecast of $3.20/MMBtu.
"A warm winter is the last thing this market needs," the bank said in a note to clients.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.135/mmBtu, compared with Friday's
range of $2.24-$2.285. Cash prices at the Transco Z6 hub in New York last traded between $1.95 and $2.30/mmBtu,
compared with Friday's range of $2.08-$2.15.
Write to Nicole Friedman at nicole.friedman@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
October 26, 2015 10:39 ET (14:39 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
102615 14:39 -- GMT
------
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