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UPDATE 1-Speculators cut U.S. natgas net longs for 2nd week in a row -CFTC
July 29, 2016 / 7:56 PM / a year ago

UPDATE 1-Speculators cut U.S. natgas net longs for 2nd week in a row -CFTC

(Adds details on gas futures, background)
    July 29 (Reuters) - U.S. natural gas speculators cut their
net long positions for a second week in a row, betting prices
will decline in the future to encourage power generators to keep
burning record amounts of gas instead of coal.
    Speculators in four major NYMEX and ICE markets reduced
their bearish bets by 2,609 contracts to 88,939 in the week to
July 26, the U.S. Commodity Futures Trading Commission said on
Friday. That is the lowest level of net longs since mid June.
    Gas futures on the NYMEX averaged $2.72 per million British
thermal units during the five trading days ended July 26 versus
$2.73 during the five trading days ended July 19.
    To avoid filling storage caverns to their maximum capacity
after a warm winter left stockpiles at record highs, analysts
forecast prices would remain relatively low this year to
pressure producers to cut output and encourage power generators
to burn more gas instead of coal. 
    Spot gas prices at the Henry Hub benchmark GT-HH-IDX have
averaged $2.14 so far this year, while futures for the balance
of 2016 were fetching $3.02. That compares with an
average of $2.61 in 2015, the lowest since 1999.
    Analysts said, however, they expect gas prices in 2017 to
rise enough to encourage drillers to boost output to meet
forecast growth in U.S. pipeline and liquefied natural gas
exports and industrial demand.
    Gas futures for calendar 2017 were trading around
$3.16.

 (Reporting by Scott DiSavino; Editing by Bill Rigby and Leslie
Adler)

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