Provident Energy Consulting

NYMEX January Gas Remains Relatively Flat Despite Bearish Storage Report

The NYMEX January natural gas futures contract slid 1.20 cents to settle at $4.124/MMBtu Thursday, following the withdrawal of 77 Bcf announced by the US Energy Information Administration for the week ended December 7.

The front-month contract was observed moving between $4.050/
MMBtu and $4.307/MMBtu. Gains seen in morning trading despite the
bearish withdrawal report came as the market tried to rebound from
Wednesday’s decline, when the near-term contract dropped 11 cents
and settled at $4.136/MMBtu, a 17-day low.
“Warmer and milder spell of weather seen in the [past] few days
has weighed on prices and pushed it below $4.15 [Wednesday],” said
Daniel Myers, market analyst at Gelber & Associates.
Thursday’s storage report was largely in line with the five-year
average for the same time period as well as the 79-Bcf withdrawal
expected by analysts surveyed by S&P Global Platts Analytics.
Current national gas stocks sit at 2.914 Tcf, at a deficit of 19.9% to
the five-year average of 3.637 Bcf/d.
“A neutral pull from the storage coupled with strong supply has
been bearish on prices,” Myers said.
Total US dry gas production averaged 85.1 Bcf over the past seven
days, up from the 77.4 Bcf/d output seen for the same time period in
2017. Production is set to stand at 84 Bcf Thursday, down slightly by
300 Bcf from the day prior, and gradually move up to average nearly 85 Bcf/d over the next 14 days, Platts Analytics estimates showed.
Total US demand is estimated to drop to 99.8 Bcf, down 4.6 Bcf on
day, with the much of the drop coming from Southeast, Northeast and
the Upper Midwest, the data showed. Demand is set to further weaken
and average 97.5 Bcf/d over the next week, resulting in a smaller draw,
further weakening prices.
The National Weather Service forecast is calling for a likelihood of
higher-than-average temperatures for much of the US over the next
two weeks.

Source: Platts 2018

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