THE WALL STREET JOURNAL

 

Natural Gas Rises Ahead of Cold Weather

 

Traders are waiting on weekly inventory data due Thursday
from the U.S. Energy Information Administration

By Nicole Friedman / Updated Oct. 14, 2015 3:58 p.m. ET


NEW YORK—Natural gas prices rose Wednesday on expectations that the surplus of the
heating fuel isn’t getting bigger.


Natural gas futures for November delivery settled up 2 cents, or 0.8%, at $2.518 a million British
thermal units on the New York Mercantile Exchange.


Robust production and moderate demand pushed the natural-gas market into oversupply this
summer, weighing on prices.


But weather forecasts on Wednesday showed “a strengthening of the eastern chill this weekend
and...into the beginning of next week as well,” said Commodity Weather Group LLC in a note.


Cold weather boosts demand for natural gas, as about half of U.S. households use natural gas as
their primary heating fuel.


In addition, traders and analysts surveyed by The Wall Street Journal expect the U.S. Energy
Information Administration to report Thursday that natural-gas inventories grew by 94 billion
cubic feet last week. If the storage estimate is correct, inventories as of Oct. 9 will be 4.5% above
the five-year average for the same week, the same level of surplus as the prior week.


The EIA said in a forecast released Tuesday that natural-gas production in seven key shale
regions fell in October from September and will decline further in November. Producers have cut
back sharply on spending in the past year, leading to a decline in new drilling, due to low
natural-gas prices and a plunge in oil prices.


FUTURES AND OPTIONS TRADING INVOLVE SIGNIFICANT RISK OF LOSS AND
MAY NOT BE SUITABLE FOR EVERYONE. OPTIONS, CASH AND FUTURES
MARKETS ARE SEPARATE AND DISTINCT AND DO NOT NECESSARILY
RESPOND IN THE SAME WAY TO SIMILAR MARKETS STIMULUS. A MOVEMENT
IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE
RELATED FUTURES & OPTIONS CONTRACT BEING OFFERED. SEASONAL
DEMAND AND CURRENT NEWS IN COMMODITIES ARE ALREADY REFLECTED
IN THE PRICE OF THE UNDERLYING FUTURES.