Provident Energy Consulting

NYMEX Front-Month Contract Adds 2.30 Cents, Continues in Zigzag Pattern

NYMEX natural gas futures continued to follow a recent trend that saw monthly contracts up one day and down the next.

Tuesday trended bullish and the February contract settled at
$2.967/MMBtu, up 2.30 cents from Monday's close.
Other monthly contracts leading into the spring were split, with
March settling at $2.835/MMBtu after losing 1.20 cents and April
adding 1.80 cents to $2.695/MMBtu.
The NYMEX settlement price is considered preliminary and
subject to change until a final settlement price is posted at 7 pm EST
(2400 GMT).
On Tuesday, trading action started out heavy and then cooled as
time went on. The February contract traded in a wide $2.948-$3.053/
MMBtu range.
“Early on there was a thought that colder weather was coming and
then they said no, so people are backing off,” Price Futures Group
senior energy analyst Phil Flynn said.
The up-and-down pattern dates back to December 28, when the
front month was trading at $3.301/MMBtu. On December 31, the price
fell to $2.94/MMBtu.
“We have yet to see any sustained weather pattern,” Flynn said.
“Any time we get reports of cold weather it turns out not to be true.”
Flynn said the sweet spot for the front-month contract is about $3/
MMBtu. “But that could break down to as low as $2.50/MMBtu if we get
through this winter and hit the warm weather,” he said.
The National Weather Service extended forecast gives some fuel to
that fire. The February-April period is forecast to see unseasonably
high temperatures in the West and along most of the Canadian border.
The Midcontinent and Northeast regions look to experience typical
winter weather, however.
Also figuring in are solid supply figures. Although dry production
was due to slip 700 MMcf Tuesday to 84.4 Bcf, over the next two weeks the figure remains steady, averaging 84.8 Bcf/d.

Source: Platts 2019

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