Market Commentary

Weekly Recap

December 22, 2014

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  • The NYMEX natural gas market has been in a free fall over the past week. The prompt month Jan-15 contract started last week just under $3.80 and closed down over 33 cents on Friday. As of 1:00 PM Monday, Dec 22, the Jan-15 contract has dropped below $3.20! The 12 Month Average followed suit, dropping 7% or just over a quarter on the week. Friday marked the first time that the 12 month average has settled below $3.40 since 9/17/12.
  • The winter 2015-2016 average experienced a significant drop as well. It started the week at $3.90 and shed just under 20 cents to settle at $3.707 on Friday.
  • Power prices fell last week but they hesitated to drop to the extent of natural gas prices. Most markets experienced dips in the 2% range with New York City continuing to have a mind of its own in shedding nearly 4%.
  • Storage hit an important marker when Thursday’s report announced a 64 BCF withdrawal. The withdrawal leaves us with 3,295 BCF in storage and for the first time this year we have a year-over-year surplus to 2013 inventory levels.
  • Weather has been the key driver in natural gas volatility over the past few days. What started as a warm December has now trickled into January with forecasts becoming much more bearish in the consuming region of the northeast. Forecasted demand, as represented from NOAA’s Jan-15 outlook below, now suggests that there is more than enough natural gas in the ground for the coming winter months.