Market Commentary

Weekly Recap

December 1, 2014

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  • Last week was quite eventful on the NYMEX natural gas market as trading was highlighted by weather, an early storage report, the expiration of the Dec-14 contract, and a holiday break!
  • Tuesday saw the prompt month Dec-14 contract expire at $4.282. This is up 55.4 cents from Nov-14’s expiration and is the highest expiration we have seen since Jul-14 expired at $4.40.
  • Thanksgiving may have cut trading one day short last week, but recent volatility on the NYMEX did not take a holiday. In a similar story to the week prior, natural gas prices climbed for a few days before plummeting on Friday. This volatility continues to be weather related as the back end of the 12 month average has been much more stable than what remains of the winter 14-15 strip.
  • In another similarity to last week, Friday’s bearishness has spilled over into this week. As of Monday, December 1, at noon the prompt month is down to $3.98 and is still falling.
  • The map below shows the primary driver of recent bearishness. December forecasts have continued to warm with not a single region in the continental US projecting cooler than normal temperatures in NOAA’s 6-10 day forecast.
  • Thanksgiving also forced an early storage report. A withdrawal of 162 BCF was announced on Wednesday, a number drastically larger than the previous 5-year average of 6 BCF.
  • Power prices still have not conceded to natural gas volatility. All market areas fell less than 1% last week.