°¿°

[Myself °¿°]

Natural Gas Retreats as Forecasts Stay Warm
Forecasts for Christmas Eve highs in the 70s for New York, Philadelphia and Washington
By TIMOTHY PUKO
Updated Dec. 22, 2015 4:44 p.m. ET
http://www.wsj.com/articles/natural-gas-slips-as-winter-weather-appears-distant-1450800223
Natural-gas prices retreated Tuesday with weather forecasts too warm to extend gas’s biggest rally in nearly a year to a second day.

Prices for the front-month January contract settled down 2.3 cents, or 1.2%, at $1.888 a million British thermal units on the New York Mercantile Exchange. The retreat comes a day after prices rose 8.1%, their largest one-day percentage gain since January.

Weather forecasts have chilled a bit, pushing bearish traders to close out at the start of the week. But they are showing that cold limited to the Rockies and Texas, with major markets for gas heat still smothered in extremely above-average temperatures through New Year’s Eve.

MDA Weather Services in Maryland is forecasting Christmas Eve highs in the 70s for New York, Philadelphia and Washington, matching or even hotter than Atlanta. Cash prices at the Transco Z6 hub in New York last traded at $1.00/mmBtu and lower Tuesday, compared with Monday’s range of $1.45 to $1.60.

A cold January “is still pie-in-sky at this point,” Martin King, vice president of institutional research at FirstEnergy Capital Corp. in Calgary, said in a note. “It is going to take a Polar Vortex of galactic proportions in January and February to undo the lack of storage withdrawals seen in December.”

So much surplus gas has built up in recent weeks that storage levels are likely to end December 6.9% above the previous record, King said. And so there is no urgency to buy gas, even if forecasts are slightly colder than they were at the end of last week, analysts said.

“Bullish traders have been fooled by false forecasts so many times that it’s doubtful they price anything in until the cold front actually hits,” said Aaron Calder, senior market analyst at energy-consulting firm Gelber & Associates in Houston. “Even then, they might have to see it in the withdrawals before the market moves significantly.”

Write to Timothy Puko at [e-mail]