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See italic and bold italic: Natural Gas Rises as Storage Addition Falls Below Expectations
Data show smaller-than-expected storage rise; hopes raised for rally
By TIMOTHY PUKO
Updated Nov. 5, 2015 11:04 a.m. ET
http://www.wsj.com/articles/natural-gas-rises-as-bottom-seekers-pounce-1446737489
Natural gas futures added to gains after data showed a smaller-than-expected addition to storage and raised hopes for a rally.

The U.S. Energy Information Administration said producers added 52 billion cubic feet of natural gas to storage in the week ended Oct. 30. That is 6 bcf less than the average forecast of 17 analysts and traders surveyed by The Wall Street Journal.

The weekly report is looked to as a leading indicator of supply and demand. A lower-than-expected addition would suggest that supply was smaller or demand was larger than expectations.

Futures for December delivery recently traded up 6.8 cents, or 3%, at $2.33/mmBtu on the New York Mercantile Exchange.

“I’m encouraged by the fact that a number came out and surprised people,” said John Woods, a Nymex trader who called himself the last bull in the gas market. “If that doesn’t make you think (a rally is possible) then what will?”

Natural gas has foundered in recent weeks with money managers moving into a near-record bearish position. Front-month prices have plummeted from near $3/mmBtu in August all the way down to nearly $2 when the November contract expired last week. The December contract had never quite fallen that far and has held close to the $2.30/mmBtu level it was at when it became the front-month contract.

That plateau has some traders that move based on charts and momentum thinking that the collapse has ended, at least for now. Many will close out bearish positions in response, which means buying back contracts and bidding up prices, brokers and analysts said.

While Thursday’s data gives the market some support, it may be limited. Inventories as of Oct. 30 surpassed 3.9 trillion cubic feet, 10% above levels from a year ago and 3.9% above the five-year average for the same week.

The high stockpiles are still nearing a record. And warm weather forecasts suggest heating demand may be limited this winter.

“Supply seems so plentiful,” said Peter Donovan, broker for Liquidity Energy LLC in New York. “Without weather, (gas) is a goner.”

Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.135/mmBtu, compared with Wednesday’s range of $2.00-$2.07. Cash prices at the Transco Z6 hub in New York last traded at $1.35/mmBtu, compared with Wednesday’s range of $1.34 to $1.40.

Write to Timothy Puko at [e-mail]