Provident Energy Consulting

NYMEX Feb Natural Gas Drops 6 Cents to Settle at $2.98/MMBtu; US Production Dips to 82 Bcf


The NYMEX February natural gas futures contract fell 6 cents Wednesday to settle at $2.98/MMBtu.

The February contract traded in a range of $2.957-$3.167/MMBtu.
The March contract lost 5 cents to settle at $2.922/MMBtu.
The spread between February and March narrowed to the lowest
point this year on Wednesday, with the February contract at a 6.8-cent
premium Tuesday and narrowing to a 5.80-cent premium Wednesday.
Year to date, the February contract has priced at a 17.3-cent premium
to the March contract.
Overall, the balance of the 2019 strip dropped, with the remaining
months decreasing Wednesday as demand and production appear to
have bottomed out.
S&P Global Platts Analytics data showed that total US production
declines of 1.5 Bcf Wednesday will push US output to 82 Bcf, the lowest of the year, based on preliminary intraday nominations.
Northeast production drops have made up most of this decline,
with production recovering from freezeoffs this weekend and a force
majeure declaration on the Texas Eastern Transmission system that
has limited north-to-south takeaway capacity to zero at the Berne
compressor station.
The duration of the TETCO force majeure declaration is unknown,
but production should recover from recent freezeoffs as Platts
Analytics data showed production averaging 83.5 Bcf/d over the next
seven days.
Market participants expect Thursday's US Energy Information
Administration natural gas storage data will show a 158-Bcf withdrawal, according to a Platts Analytics survey. A draw of this volume would be the largest of the winter season, with the largest withdrawal so far, a 141- Bcf decrease, occurring the week ended December 14.
“It’s too early to throw the towel in on winter," said Kent
Bayazitoglu, director of market analytics at Gelber & Associates.
He said the recent production declines and weather forecasts
show bullish sentiment will finish up January, and longer-term
February forecasts will provide further price support.

Source; Platts 2019

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