Provident Energy Consulting

NYMEX Prompt-Month Gas Futures Settle Above $4/MMBtu for First Time Since Dec 2014

NYMEX December natural gas futures jumped 31.3 cents Tuesday to settle at $4.101/MMBtu, a level not seen since December 2014.

Just a few months ago, market sentiment suggested a $4/MMBtu
NYMEX contract settle may not be seen again.
On December 1, 2014, the NYMEX prompt-month contract settled
at $4.007/MMBtu. Since then, it dropped to a low of $1.639/MMBtu
March 3, 2016. There have been strong increases as winter nears,
with the November 2018 prompt-month contract settling at
$3.185/MMBtu. The December contract traded between $3.902/MMBtu and $4.11/MMBtu Tuesday.
With cold weather setting in, total US demand rose
5 Bcf/d to 108.7 Bcf Tuesday, S&P Global Platts Analytics data
showed, as residential/commercial demand tacked on another 2.6
Bcf/d to 44 Bcf. Exports also ticked up, contributing 0.5 Bcf/d to
total US demand increases, with Mexican exports jumping 300
MMcf/d and LNG demand rising 200 MMcf/d Tuesday, Platts Analytics
data showed.
Stephen Schork, editor of The Schork Report, suggested the
contract may be at the “point of resistance right now.”
“The bears have always been falling back on production,” Schork
said, but added “why hasn’t all this production made it into the
ground, then,” referring to natural gas storage inventories, which sit
at historic lows.
The December-March forward contracts averaged $3.995/MMBtu
in morning trading, up 35.95 cents from Monday.
Meanwhile, the summer strip averaged $2.773/MMBtu in April-
September contracts, up from $2.686/MMBtu at the start of
November trading.
In the near term, total US demand is expected to top out
Wednesday at 109.4 Bcf, Platts Analytics data showed, then slide
over the next seven days to 101 Bcf/d before dropping to 92.5 Bcf/d
eight to 14 days out.

Source: Platts 2018

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