March 9, 2015
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- After a small dip on Monday, the natural gas market endured a slow but steady climb north throughout most of the week last week. The prompt month settled Monday just under $2.70 per MMBtu and settled as high as just over $2.84 on Thursday which means the three day march higher went on for just over 14 cents. For the week, both the prompt month and 12 month strip average gained more than a dime.
- Perhaps the most likely cause for the move higher is the weekly storage report and the withdrawals that we keep seeing each week. Last week marked the second consecutive withdrawal above 200 BCF. For reference, the same two weeks over the past seven years had seen withdrawals peak at 165 BCF but the past two weeks this year have been 219 and 228 BCF.
- Clearly the recent cold is making a significant dent in inventory relative to historical benchmarks. Over the past two weeks, that dent amounts to 200 BCF against the five year average and there is still one more report this week that will show a larger withdrawal than normal. Early indications are for a withdrawal of about 200 BCF which is significantly larger than the 5 year average withdrawal of 116 BCF.
- Weather forecasts have shifted to warmer than normal for the next 10 days although the 10-15 day forecast is now showing a bit of cooler than normal temperatures so traders will certainly keep one eye on those forecasts throughout the week.
- Electric markets followed natural gas last week with New York moving in near perfect correlation to the NYMEX.