Weekly Recap- Week Ending 12/08/2017
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Daily Natural Gas Settlements
Despite the first significant cold stint and winter storm that came to the eastern half of the country, the natural gas futures market spent much of last week in sell mode. Traders and analysts spent less time worrying about the weekend weather and more time focused on longer term forecasts (specifically the 11-15 forecast). From a bigger picture perspective, it is possible that increased daily production is adding a glut of supply to the market, which is causing some long term bearish movement.
The prompt month January 2018 natural gas contract dropped on both Monday and Tuesday, shedding nearly 15 cents over the course of the two days. Combining that loss with an almost 16 cent drop on Thursday and marginal gains on Wednesday and Friday meant the prompt month shed nearly 29 cents last week.
Last Week on the NYMEX
While the prompt month dropped 9.4%, the 12 month strip shed 6.1% or 18.1 cents. Similarly, next winter dropped more than 12 cents, or almost 4%. Even the 36 month strip dropped 9.3 cents, or 3.2%. Such a movement in the longer term curve is less typical for the market and certainly not a result of newer weather forecasts, but rather an indication of a more fundamental bearish event in the marketplace.
Natural Gas in US Storage
Also helping the bears was this week’s inventory report, which showed a 2 BCF injection as a result of the recent warm weather. That cut a big gap in the deficit to last year and we expect that gap to shrink even further this week.
NOAA 6-10 Day Outlook
NOAA’s 6-10 day outlook also shows almost no below normal temperatures and calls for above normal temperatures for all regions except the Northeast. Forecasts do constantly change, but the up-coming week or two are shaping up to be warmer than usual.
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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