Provident Energy Consulting

NYMEX December Natural Gas Contract Gains 1.4 Cents as US Production Again Breaks Record

Two days in a row of record-breaking US natural gas production may be alleviating concerns of a cold winter, as the NYMEX December gas contract increased 1.4 cents Tuesday, to settle at $4.262/MMBtu.

The contract traded between $4.104/MMBtu and $4.325/MMBtu
The coldest November dating back to 2014 and storage concerns
added volatility to the market and pushed up December contract
prices. However, prices fell and normalized as natural gas production
set all-time highs over the past two days. Monday’s revised estimate
put US production at 86.1 Bcf, 100 MMcf above Sunday’s all-time high,
S&P Global Platts Analytics data showed.
Platts Analytics forecasts showed Tuesday’s production declining
to 85.5 Bcf, with output remaining around 85.6 Bcf/d over the next
seven days.
Platts Analytics data showed temperatures have been colder than
historical averages, with US temperatures averaging 46.2 degrees
Fahrenheit for November, the coldest November since 2014.
December forecasts, however, call for average US temperatures of
43.8 degrees, above the 2016 and 2017 averages of 39.8 and 40.2
degrees, respectively.
Tuesday demand ramped up 7.7 Bcf to above 100 Bcf as national
average temperatures are forecast to be 4.9 degrees below normal
at 41 degrees. As the December contract rolls off this week, aboveaverage temperatures are expected from November 29 through December 3.
The prompt-month contract may find support at $4/MMBtu.
"Mild weather could see us break the $4 support," said Kent
Bayazitoglu, director of market analytics at Gelber & Associates.
"This level broke through quickly on the way up; however, it could
bounce off of $4 a little bit.”
Bayazitoglu noted that the six- to 10-day weather forecast was
bearish, while the eight- to 14-day forecast was bullish for NYMEX
natural gas futures contracts.

Source: Platts 2018

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