Provident Energy Consulting

NYMEX December gas contract rises on strong demand

The NYMEX December natural gas futures contract rose 6.9 cents and settled at $3.788/MMBtu Monday on strong demand.

The front-month contract traded between $3.735/MMBtu and
Total US demand is set to reach 104.4 Bcf Monday, 6.4 Bcf higher
than Friday, and up 20.8 Bcf from the five-year average on the same
day, according to data from S&P Global Platts Analytics.
Much of the increase was fueled by the sharp rise in residential and
commercial demand, which is set to jump 4.4 Bcf from Friday to 42.5 Bcf Monday as colder weather grips much of the US.
The increase in residential and commercial demand constitutes
increases of 900 MMcf/d and 700 MMcf/d in the Midcontinent
production areas and Southwest region, respectively, with another
500 MMcf/d in the Upper Midwest and 300 MMcf/d in Texas region.
These increases may be offset by an estimated 1 Bcf drop in the
Northeast region Monday, the data showed.
Over the next seven days, heating demand is projected to average
40.4 Bcf/d, gradually declining to 32.1 Bcf/d in the next eight to 14 days, with the US National Weather Service calling for higher-than-average temperatures across much of the US.
With demand pacing higher than normal for this time of the year,
storage may see a weaker injection or a withdrawal, which could be
another reason for bullish sentiment in the market as November
usually sets the tone for the rest of the winter months.
On the supply side, total US dry gas production is set to stay flat
day on day, standing at 84.9 Bcf, while imports from Canada may see a 100 MMcf drop on the day to 3.8 Bcf Monday, according to Platts Analytics. Over the next seven days, production is projected to stay flat and average 84.9 Bcf/d, nearly in line with the output seen in the past seven days.

Source: Platts 2018

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