Market Commentary

Weekly Recap

December 8, 2014

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  • What a difference a month makes! Last month we saw forecasts for another Polar Vortex, but there is nothing “polar” or “arctic” about the current forecasts and the NYMEX is dropping alongside.
  • The prompt month settled as low as $3.649 last Thursday which marks the lowest settlement price since the last week of October. Aside from that week, the prompt month hasn’t settled below $3.70 since November 2013. It’s safe to say that the market is as bearish right now as it has been in more than a year.
  • Last week’s storage report gave more momentum to the bears as the report showed a smaller withdrawal than expected. The storage graph to the right shows that inventory levels continue to gain ground on historical benchmarks which is undoubtedly a bearish signal to the futures market.
  • The 5 month average for winter 2015-2016 has dropped to just above $3.80 on the futures market. End users should obviously keep a close eye on prices for the remainder of this winter, but should keep in tune with the forward curve as well. In light of last winter (and last month’s) volatility, winter pricing below $4 may be an attractive point for many customers.
  • Electric prices of late seem to be bound at the hip to natural gas prices. Last week saw the 12 month strip drop almost 4% and the electric prices tracked below dropped between 3% and 3.7%.