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DAILY NATURAL GAS SETTLEMENTS
Trading at the end of November is starting to closely resemble trading at the end of October. As the prompt month nears its expiration day, it starts to drift closer and closer to $2/MMBtu. Thursday and Friday of last week saw the prompt month December contract drop more than 20 cents from $2.347 to $2.145 as it approaches the November 2015 expiration of $2.033.
LAST WEEK ON THE NYMEX
One of the main reasons for the end of week drop in prices was the release of the weekly inventory report by the EIA. Last week showed an injection of 15 BCF which brought inventories to exactly 4 TCF, an important benchmark that traders and analysts have pegged all summer as a possibility.
NATURAL GAS IN US STORAGE
It should be noted that the EIA changed from having 3 regions (East, West, and Producing) to a 5 region setup (East, Midwest, Mountain, Pacific, and South Central). The change in regions better aligns supply and demand by more accurately grouping the current mix of storage locations, which have changed drastically in the past 5-10 years.
NOAA 6-10 DAY OUTLOOK
Additionally, weather forecasts such as the NOAA 6-10 day outlook show above normal temperatures in key consuming regions like the Northeast. The market impact of these forecasts is far greater than the impact of the below normal temperatures forecasted in regions like Texas and the Western two-thirds of the country.
WEEKLY COMMODITY CHANGES IN POWER MARKETS
Power prices followed natural gas prices lower last week, although they did not drop nearly as aggressively.
The comments made above regarding the NYMEX futures market are the sole opinion of the author, not necessarily the opinions of Interstate Gas Supply, its officers or its employees. Information provided in this “Market Update” is for illustration purposes only, and neither the author nor Interstate Gas Supply shall be liable for any information contained herein.
IGS Energy provides weekly analysis and market updates on industrial and commercial natural gas news. We cover natural gas prices, futures, and national storage information, giving you the most accurate market data.
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