DJ US GAS: Futures Slip On Profit-Taking, Weather Forecasts
By Christine Buurma
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Natural gas futures slipped Friday, driven lower by
profit-taking, moderating weather forecasts and a government report showing a
higher-than-expected number of job cuts in December.
Natural gas for February delivery on the New York Mercantile Exchange was
trading 16.6 cents lower, or 2.86%, at $5.64 a million British thermal units
after opening floor trade 10.6 cents lower at $5.70/MMBtu.
Traders were selling contracts in response to relatively high prices after
gas futures hit $6/MMBtu earlier in the week, a one-year high, on forecasts of
frigid temperatures in the major gas-consuming regions. Cold weather was
expected to persist in the U.S. Northeast and Midwest next week but moderate
later in the month.
The market's failure to settle above $6 indicates the rally may have been
overdone, said Rich Ilczyszyn, an analyst with Lind-Waldock in Chicago.
"People are really interested in selling the key $6 level until we close out
above it," Ilczyszyn said.
MDA EarthSat, a Rockville, Md. private forecaster, was predicting
below-normal temperatures in the Northeast, Southeast, South Central region and
parts of the Midwest from Jan. 8 to Jan. 12. Milder temperatures were expected
later in January, however.
"Overnight, natural gas retreated further as weather forecasts for the coming
weeks continue to moderate," analysts with Tradition Energy in Stamford, Conn.
wrote in a note to clients Friday.
Meanwhile, gas inventories remain ample despite the cold snap. Total gas in
storage as of Jan. 1 was 3.123 trillion cubic feet, 11% above the five-year
average and 10% above last year's level.
A Labor Department report showing a sizeable reduction in nonfarm payrolls in
December was also pressuring the gas market lower Friday. Gas traders have
closely tracked economic data for signs of a recovery that would boost slumping
energy demand.
Nonfarm payrolls fell by 85,000 in December, compared with a revised 4,000
gain in November. Economists had expected a payroll decrease of just 10,000.
-By Christine Buurma, Dow Jones Newswires; 212-416-2143;
christine.buurma@dowjones.com
(END) Dow Jones Newswires
01-08-10 0929ET
Copyright (c) 2010 Dow Jones & Company, Inc.
09:29 010810
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