Provident Energy Consulting

NYMEX Jan Natural Gas Contract Bounces Back as US Demand Climbs 11 Bcf


The NYMEX January natural gas contract recovered some of Monday’s losses, increasing 11.80 cents to settle at $4.457/MMBtu Tuesday.

January’s contract traded in a range of $4.358/MMBtu to $4.574/
MMBtu.
All futures contracts in the balance of the 2019 strip rose Tuesday.
Double-digit increases were seen in the winter months, while the
summer 2019 contracts gained a few cents.
March’s contract had the strongest increases, up 16.90 cents to
settle at $3.937/MMBtu.
US demand increased substantially Tuesday. S&P Global Platts
Analytics showed demand pushed just over 100 Bcf/d, up 11 Bcf from
Monday. Despite reaching a low of 78.6 Bcf the past seven days,
demand is forecast to remain at Tuesday’s level of 100.4 Bcf/d over the next week.
The National Weather Service forecasts above-average
temperatures across the Northeast and Midwest over the next two
weeks, while below-average temperatures are expected in the
Southwest and Rockies. Platts Analytics’ eight– to 14–day forecast calls for US demand to drop to 90.6 Bcf/d.
US production came off its steady highs of the past week. Supply
dropped by 2.8 Bcf from Monday to 83.4 Bcf, with declines recognized
in every producing region across the country, according to Platts
Analytics.
John Woods, president of JJ Woods Associates, said that despite
the warmer two-week forecast, “we’re going to see colder
temperatures and people aren’t going to be fooled.”
Woods said the market is still poised to go higher, adding that
Monday’s losses were a technical selloff.
While the weekly natural gas storage number from the US Energy
Information Administration has historically been a fundamental driver,
the numbers now are less relevant as the low US inventories are
already priced into the market, Woods said.

Source: Platts 2018

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