Natural Gas Futures Prices Rebound
Updated June 4, 2015 3:31 p.m. ETNatural gas prices dipped, then rebounded to near unchanged as trad...
Published on: Mar 3, 2016
Transcripts - Natural Gas Futures Prices Rebound
Natural Gas Futures Prices Rebound
Updated June 4, 2015 3:31 p.m. ET
Natural gas prices dipped, then rebounded to near unchanged as traders who respond to charts
boosted the market despite new data showing the largest weekly surplus on record.
Prices bounced after falling just past a one-month intraday low of $2.557 a million British thermal
units. That could have been enough to scare many bearish traders into quickly unwinding pre-
existing bets that profit when the market falls, traders and analysts said. Such trades are closed out
by buying futures to cover the position, which can feed into a price rally when it is done in large
numbers at the same time.
The front-month July contract lost 0.8 cent, or 0.3%, to $2.626 a million British thermal units on the
New York Mercantile Exchange. Prices had fallen as much as 3% in the morning before, flip-flopping
around unchanged the rest of the day.
The low point came after the U.S. Energy Information Administration said storage levels grew by
132 billion cubic feet in the week ended May 15. That is the largest weekly surplus in EIA records
that date back to 1994.
Many traders and analysts said that oversupply will eventually push another fall in gas prices. They
said Thursday's rebound was largely a technical move and not a sign that many money managers are
interested in betting prices will rise, also known as "getting long."
"We're just respecting an old low," said Dean Hazelcorn, trader at the brokerage Coquest Inc. in
Dallas. "People are not reloading their guns to get long."
The surplus is more than 40% larger than the 92-bcf five-year average addition for the week and
more than the 123-bcf median average from forecasters surveyed by The Wall Street Journal. It
suggests the market was oversupplied by about 3 bcf a day last week, according to analysts'
Last week's addition brought storage levels to 2.2 trillion cubic feet, 51% more than a year ago and
1% above the five-year average.
The EIA storage data is widely considered one of the best measures of supply and demand for the
natural-gas market. Gas prices have been too high to convince power plants to use more of it and
absorb near-record supplies, and Memorial Day also probably cut demand by keeping businesses
and schools closed, analysts said.
"The market was ready for a large injection, but it's still extremely bearish," said Kent Bayazitoglu,
analyst at Gelber Associates. "We're not going to see (a) strong rebound."
Despite all that, it is difficult to bet on lower prices in early June, said John Woods, president of JJ
Woods Associates and a Nymex trader. There is still a chance that the coming summer could have a
long spell of hot weather, ramping up demand for gas-fired power to run air conditioning, he said.
"You sell this number, and you have to pray that something drastic happens, that we have the
coldest summer we've had in a long time," Mr. Woods said.
The U.S. Energy Information Administration said storage levels grew by 132 billion cubic feet in the
week ended May 15. That is the largest weekly surplus in EIA records that date back to 1994. An
earlier version of this article incorrectly said it was the second-largest weekly surplus on record.
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