Provident Energy Consulting

NYMEX February Gas Climbs as Demand Spikes on Cold Snap


NYMEX February natural gas futures contract climbed 7.90 cents and settled at $3.178/MMBtu Friday, as near-term demand jumped due to extremely low temperatures across much of the US.

The front-month contract traded between $3.047/MMBtu and
$3.207/MMBtu.
The US National Weather Service expects lower-than-average
temperatures in the Northeast, Midcontinent, Southeast and Texas
over the next six to 10 days.
The possibility of further cold spells in February and March also
provided support.
The March contract climbed 7.40 cents and settled at $3.072/
MMBtu, moving between $2.946/MMBtu and $3.090/MMBtu.
Total demand is set to jump to 127.4 Bcf Friday, up 13.8 Bcf day on
day, on the cold snap, S&P Global Platts Analytics data showed.
However, demand is projected to taper and average 106 Bcf/d over the
next eight to 14 days, the data showed.
So far in January, demand is averaging 110 Bcf, a 3.9 Bcf year-onyear
decrease.
The storage gap, which drove prices higher during cold snaps in
November, has narrowed significantly on weak draws in December,
putting current gas inventories at 2.37 Tcf, down 11.4% from the fiveyear average of 2.675 Tcf, according to data from the US Energy Information Administration.
The near-term demand may see strong pulls from storage again,
driving prices higher in the coming days. But the market could also weaken as there is not much left of the winter, said Kyle Cooper, an analyst at IAF Advisors, noting that there is stroage deliverability if demand peaks in February and March, leading to price fluctuations. Total US dry gas production slid to 84 Bcf/d over the past 10 days, down 1 Bcf/d compared with the 10 days prior, likely due to freeze-offs, according to Platts Amalytics. 

Source: Platts 2019

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