Provident Energy Consulting

NYMEX March Gas Settles 8 Cents Lower on Rising Temperatures


The NYMEX March natural gas futures contract slid 8 cents Friday to settle at $2.734/MMBtu as the Upper Midwest and Northeast emerged from a record-setting freeze.

Phil Flynn, a senior energy analyst with Price Futures Group in Chicago, said the decline is directly related to the current weather picture. The mercury in Chicago dropped Thursday to minus 46 degrees Fahrenheit.
“Well, we’re going from a situation where we had the coldest
temperatures ever — it was colder in Chicago [Thursday] than it was
on Mars — and [Friday] it’s a balmy zero,” he said. “We had a record
heating degree day of more than 90 and we’re looking to reverse that.
On Sunday, it’s supposed to be in the 50s.”
With the arrival of warmer weather, market participants took a
bearish tack and prices started dropping, Flynn said.
But March was not the only month that slid — all the monthly
contracts for 2019 shed a few cents.
April was down 6.6 cents to $2.699/MMBtu, while May fell 6.3 cents
to $2.709/MMBtu.
US demand plummeted Friday, with consumption estimated by S&P
Global Platts at 109.2 Bcf, 23.6 Bcf below Thursday's demand of 132.8 Bcf. Although all areas of demand were down, residential and commercial consumption dropped the most, totaling 55.3 Bcf Friday, down from 70.6 Bcf Thursday.
Looking ahead, demand is expected to continue to subside. Over
the next seven days, consumption is set to average 94.3 Bcf/d. In the
following week, demand is expected to average 101.9 Bcf/d.
Although that level of demand is above that of the previous week,
it is well below the demand levels seen during the big freeze.
Gas stocks took a major hit in the cold spell, but withdrawals are
not expected to be as severe in the days ahead.
Friday’s pull was forecast to be 28.5 Bcf, 22.4 Bcf below the 50.9
Bcf taken from storage stocks Thursday.
The NYMEX settlement price is considered preliminary and subject
to change until a final settlement price is posted at 7 pm EST (0000
GMT Saturday).

Source: Platts 2019

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