Provident Energy Consulting

NYMEX March Gas Shows Signs of Rebound Amid Near-Term Cold Weather Outlook


The NYMEX March natural gas futures contract rose Friday amid expectations of cold weather in the near term.

At settlement, the front-month contract climbed 5.20 cents and
traded at $2.625/MMBtu, moving between $2.543/MMBtu and
$2.631/MMBtu.
The US National Weather Service calls for lower-than-normal
temperatures across much of the US over the next two weeks, which
may result in an upward push in heating demand and, in turn, some
heavy drawdown from storage.
“There may be some stronger withdrawals closer to or above the
five-year average in the second half of February," said Daniel Myers of
Gelber & Associates, an energy advisory firm.
National gas stocks currently stand at 1.882 Tcf, at a 15% deficit
to the five-year average of 2.215 Tcf, according to US Energy
Information Administration.
The April contract climbed 4.60 cents to settle at $2.656/MMBtu
while the May contract gained 4.30 cents to $2.682/MMBtu, likely on
lingering cold weather which may bring some weather-related upward
movement in prices in the shoulder season.
Residential and commercial demand is set to stand at 43.6 Bcf
Friday, up 5.3 Bcf on day, according to S&P Global Platts Analytics.
Much of the gains in heating demand were driven by temperatures in
the Upper Midwest and Midcontinent, which ran 10-17 degrees
Fahrenheit below seasonal norms.
Heating demand is estimated to continue to climb over the next
seven days to average 45.9 Bcf/d, the data showed. In the month so
far, demand has averaged 45 Bcf/d, down about 700 MMcf from the
same period last year.
Prices remained well below $3/MMBtu level for the summer
months, as elevated production is likely to keep a lid on prices. Total
dry gas production averaged 85.3 Bcf/d so far this winter, compared
with 76.8 Bcf in the same time period last year.

Source: Platts 2019

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