Provident Energy Consulting

NYMEX December gas rises despite warmer winter outlook


The NYMEX December natural gas futures contract rose 7.4 cents and settled at $3.261/MMBtu Wednesday, despite a warmer-than-average weather outlook

The front-month contract traded between $3.207/MMBtu and
$3.275/MMBtu.
The US National Weather Service calls for a likelihood of warmerthan-
average temperatures over the next six to 10 days across much of
the US. But prices were pushing up despite the expected warm start to
winter, likely because the market is still indecisive about winter
demand as storage stocks sit well below the five-year average.
Current national stocks sit at 3.095 Tcf, a deficit of nearly 17%, or
624 Bcf, to the five-year average of 3.719 Tcf, according to the US
Energy Information Administration.
Bullish storage expectations are likely driving Wednesday’s gains. A
consensus of analysts surveyed by S&P Global Platts expects a 52-Bcf injection for the week ended October 26, significantly below the fiveyear average of 62 Bcf.
Total US supply is set to drop by 700 MMcf day on day to 88.1 Bcf
Wednesday, according to Platts Analytics. Much of the declines are
likely to be driven by total dry gas production, which is estimated to
drop by 600 MMcf on the day to stand at 84.7 Bcf.
Over the past five days, production averaged 85.1 Bcf/d, an increase
of 600 MMcf/ d from the prior five days. Output increased 600 MMcf/d
month on month to average 84.0 Bcf/d for October. Average
production stood at 74.5 Bcf/d in October 2017.
Platts Analytics projections show output is likely to average nearly
85 Bcf/d over the next two weeks.
US demand is estimated to drop nearly 1 Bcf and slide to 70.2 Bcf
Wednesday, according to Platts Analytics data, likely on mild
temperature expectations. Over the next seven days, demand is
projected to average 70.7 Bcf/d, which is largely in line with the 71.8
Bcf/d demand seen during the same time last year.

Source: Platts 2018

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