Newspaper article THE JOURNAL RECORD

Natural Gas Futures Recover from Volatile Holiday Trading

Newspaper article THE JOURNAL RECORD

Natural Gas Futures Recover from Volatile Holiday Trading

Article excerpt

Prices for natural gas futures rose Friday on the New York Mercantile Exchange, recovering somewhat from a volatile holiday trading season that saw the February contract swing nearly $1 between its high and low.

February natural gas settled at $3.106 per 1,000 cubic feet, a gain of 21.6 cents. The contract, which stood at $3.595 on Dec. 26, was as low as $2.612 as recently as Tuesday.

Bob DeMan, an analyst with Paribas Futures Inc., said some of that volatility was due to the fact that there was less volume as many traders took vacation in the days between Christmas and New Year's Day. DeMan said natural gas futures are also naturally volatile this time of year, when the market trades on technical and weather factors. "This is a market that likes to overdue things. It moves to the upside then to the downside," he said. Still, Friday's surge was mostly due to forecasts that a front of cold air will invade the eastern portion of the country -- now experiencing unseasonably warm weather -- more quickly than expected next week, DeMan said. "We're not talking about frigid, frigid weather. This would be a return to normal temperatures, maybe slightly below normal temperatures," he said. The February contract was also supported by the American Gas Association's weekly data on storage withdrawal. The report, released after the market's close Thursday, showed a drawdown of 128 billion cubic feet. Analysts had predicted a withdrawal of 80 to 115 billion cubic feet. In other energy trading, February heating oil fell .82 cent to 71.29 cents a gallon. Heating oil futures fell after a report showed inventories rose last week, easing concern that inventories would be too low to meet demand during a cold snap. Brisk refinery production and a lengthy spell of milder weather -- combined with above-average temperatures across most of the U.S., including the Atlantic seaboard, according to the National Weather Service -- cut demand for heating fuels, leaving supplies in storage to rise and driving prices lower. After floor trading ended yesterday, the American Petroleum Institute, in its weekly inventory report, said supplies of U.S. heating oil and other distillate fuels rose by 2.47 million barrels to 123.8 million barrels. While that trails last year's supplies by 4.2 percent, concern over spot shortages ebbed. "The API and DOE reports were bearish, especially in the distillate stocks -- that's the highest level we've seen in heating oil supplies for some time," said Drew Dickson, a director of crude and refined products trading at GSC Energy Corp. in Atlanta. Yet there's "still enough of the winter left and steady demand from Europe to support prices," he said. "We're going to wait to see what kind of weather reports we get next week." In its U. …

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