Provident Energy Consulting

NYMEX February Gas Falls 10 Cents on Strong Production, Weaker Demand

The NYMEX February natural gas futures contract opened the week exploring the downside as demand declined and production remained strong.

February settled at $2.944/MMBtu Monday, down 10 cents from
Friday's close. The March contract also fell, sliding 5.8 cents to
The NYMEX settlement price is considered preliminary and subject
to change until a final settlement price is posted at 7 pm EST (0000
According to S&P Global Platts Analytics, US demand was expected
to total 83.1 Bcf Monday, some 300 MMcf under Sunday’s 83.4 Bcf. Over the previous six days, demand had averaged 91.72 Bcf/d.
Consumption was slated to drop even more Tuesday, totaling 81.1 Bcf.
Although demand is expected to average 96.05 Bcf/d over the next
two weeks, it is a far cry from the levels seen last year.
At this point in the calendar in 2018, demand was averaging 126
Bcf/d. By contrast, demand has averaged just 90.5 Bcf/d so far this year.
Meanwhile, dry gas production is chugging along at a brisk pace.
Monday’s dry gas production was expected to be 84.2 Bcf, which is
in line with the seven-day average of 84.01 Bcf/d. That level is well
ahead of 2018, when the first week of January had average dry gas
production of 74.2 Bcf/d.
The increase in US production has triggered a drop in imports from
Canada. Monday’s flows from across the border were forecast to total
5.1 Bcf. In the first seven days of January 2018, the US brought in an
average of 6.6 Bcf/d of Canadian gas.
The high rate of production coupled with slack demand has helped
keep withdrawals from storage to a minimum. Monday’s pull was
estimated at 4.3 Bcf, compared with a seven-day average of 11 Bcf/d.
The daily average is markedly less than draws in 2018. At this time
last year, withdrawals were more than quadruple what has been seen
so far, averaging 49.8 Bcf/d.

Source: Platts 2019

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