THE WALL STREET JOURNAL

 

Natural-Gas Futures Rise on Demand
Hopes

Weather Pockets and Weekend Blast Off Louisiana That
Shutdown a Pipeline Spur Gain


By Christian Berthelsen /
Updated Sept. 15, 2014 5:10 p.m. ET

 

Natural-gas prices climbed Monday on hopes for demand for the fuel after early-season
snowstorms hit the northern Midwest. A fatal explosion over the weekend that shut down a
pipeline that feeds into the delivery point for the benchmark U.S. contract also spurred bets
on tighter supplies.


Natural gas for October delivery rose 7.4 cents, or 1.9%, to $3.931 a million British thermal
units on the New York Mercantile Exchange.


Analysts were hard-pressed to point to fundamental developments that drove Monday's
upswing, with overall mild weather forecasts for the coming weeks that were expected to
limit gas-fired heating and cooling demand and with large additions to stored inventories
expected in U.S. government data later this week.


But they pointed to pockets of heat and cold over the weekend that could have
incrementally driven demand in limited markets, as well as the reminder brought by the
snow that winter is on the way--and with it, heating demand at a time when inventories
remain 15% below average levels.


"People are getting nervous and reacting to short-term weather forecasts," said Phil Flynn,
account executive at wholesale brokerage Price Futures Group in Chicago. "It's mid-
September, and it's already starting to get cold."


In the absence of other obvious support for the market, some analysts pointed to the Gulf of
Mexico pipeline explosion over the weekend that curtailed some gas deliveries into the
crucial Henry Hub interconnection in Erath, La.


The explosion occurred around 11:10 a.m. local time Saturday, 6 miles south of Timbalier
Bay off the southeast coast of Louisiana, killing one worker and injuring two. State officials
cited a valve failure on a gas handling line. Chevron Pipe Line Co. shut down the line and
launched an investigation into the incident.


The pipeline incident "appeared to be a contributor to today's rally," research firm
Ritterbusch and Associates said in a note.


Still, a Chevron spokesman said in a statement emailed to The Wall Street Journal that
interruptions were minimal and that most production associated with the closed line was
rerouted to an alternative delivery system.


The gain in gas futures was the second in a row, and the front-month contract is now up
2.8% in the last two sessions.


—Lynn Cook contributed to this article.
Write to Christian Berthelsen at christian.berthelsen@wsj.com


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