DJ Nymex Gas Surges To Fresh 2005 High As Oil Complex Rises
NEW YORK (Dow Jones)--Natural gas futures on the New York Mercantile Exchange
surged Thursday to their highest level of the year, and the highest since
November.
May natural gas futures rose 19.3 cents to $7.653 per million British thermal
units.
The crude complex clearly led the way, and the catalyst was a combination of
some concerns about the pace of gasoline stockpiling and a widely cited report
by Goldman Sachs that warned crude prices could see a spike as high as $105 a
barrel. Traders were surprised by the report's impact.
"Everybody's being led by speculative, hyped-up reports," said Guy
Gleichmann, president of futures broker United Strategic Investors Group.
A weekly report on natural gas storage was seen as a non-event and came in
close to expectations. George Speicher, a gas futures trader at Dow Inc., noted
that the subsequent rise in prices stemmed from general bullishness in the
energy complex, and that the data release just presented a natural pause for
traders.
"It's just like the crude numbers yesterday - they just want to get it out of
the way and then run it," he said.
Total gas in underground storage is now at 1,239 Bcf, a surplus of 206 Bcf,
or 19.9%, over the five-year average level for this week of the year.
Expectations for next week, the final report of the heating season, now range
from a small draw to a small build in the single digits, virtually making it
certain that storage will end above 1.2 Tcf and about 200 Bcf above typical
levels.
An unusually cold start to March left total storage for the beginning of the
injection season slightly lower than expected just a month ago. The draw for
March is now set for an all-time record, according to Michael Schlacter of
forecasting firm Weather 2000.
The weather outlook for April is more benign based on CME weather futures,
according to Agbeli Ameko, managing partner of weather and energy consulting
firm Enercast.
"April is not really very bullish for natural gas. This rally we're seeing
now is really based on other factors," said Ameko, who expects crude futures to
hit $62.50 a barrel before Memorial Day.
Physical gas prices followed futures higher with the benchmark Henry Hub in a
range of $7.35-$7.66/MMBtu, a significant discount to futures.
-By Spencer Jakab, Dow Jones Newswires; 201-938-4377;
spencer.jakab@dowjones.com
(END) Dow Jones Newswires
03-31-05 1607ET
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The gas-directed rig count first popped > 1,000 about 11 months before March began, yet with a cold start to the month we get a record draw. Pretty impressive. I guess I was wrong to be bearish on natty prices for this shoulder season. The supply/demand balance should be able to show its true colors now that weather is out of the equation.
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