GS style's article------- nothing can become something!!! Natural Gas Prices Strengthen on Pre-Winter Worries
Published: Sep 16, 2014
By Nicole Friedman
NEW YORK--Natural-gas prices gained for a third straight session on Tuesday but held below $4 a million British thermal units, as traders began looking ahead to expected winter demand.
Natural gas for October delivery settled up 6.4 cents, or 1.6%, at $3.995/mmBtu on the New York Mercantile Exchange, the highest settlement since Aug. 29.
Futures traded down earlier in the session on expectations that demand for natural gas would be muted in the next two weeks due to moderate temperatures. Natural-gas demand is most active during extreme temperatures, when people use gas-powered air-conditioning or turn on natural-gas indoor heating. Temperatures are expected to be cooler than normal in the eastern U.S. and hotter than average in the West in the next two weeks.
However, traders who had bet on lower prices likely closed out those positions once prices fell near $3.86/mmBtu in intraday trading, allowing buyers to step in, said Jim Calhoun, derivatives trader at Twin Eagle Resource Management. "I think there's just a lot of winter fear out there right now," Mr. Calhoun said. "People having short memories as they do, everybody's worried about seeing a repeat of last year," when frigid temperatures sent front-month futures spiking above $6/mmBtu.
The contract for January delivery rose by more than the October contract, settling up 7.3 cents, or 1.8%, at $4.222/mmBtu.
"We typically see a rally in mid-September as gas marketers take their last chance to buy gas for the winter," said Aaron Calder, analyst at Gelber & Associates, in a note.
Natural-gas stockpiles were depleted by a long winter, but storage levels have rebuilt much faster than expected amid robust production and moderate summer weather. As of Sept. 5, supplies stood 14% below the five-year average for the week.