Provident Energy Consulting

NYMEX April Gas Tumbles on Demand Weakness

The NYMEX April natural gas futures contract sank Monday on weakening shoulder season demand.

The April contract settled at $2.772/MMBtu Monday, a 9.3-cent fall
from Friday’s close of $2.865/MMBtu.
The contract traded in a range between $2.766/MMBtu and $2.841/
MMBtu Monday.
This was the largest largest front-month drop in nearly a month.
On February 13, the prompt contract dropped 11.3 cents day on day.
That same day was also the last time the front-month contract dipped
below its year-ago mark. Since then the front month has been priced
higher than a year earlier.
Down the strip, prices also slid, with May and June futures each
falling about 8 cents compared with Friday’s close.
While near-term domestic demand is expected to tick 3 Bcf
higher day on day to 89 Bcf on Monday, the eight- to 14-day forecast
averages 87.3 Bcf/d, according to S&P Global Platts Analytics, a
somewhat muted level after the recent winter storms that have
rumbled across the US.
US dry gas production is expected to fall 300 MMcf day on day to
86.1 Bcf Monday and is expected to remain rangebound over the next
two weeks, according to Platts Analytics. Over the eight- to 14-day
hence period, dry production is forecast to average 86.3 Bcf/d, just a
100 MMcf increase compared with the 86.2 Bcf/d average for the
coming seven days, according to Platts Analytics.
The US National Weather Service’s eight- to 14-day forecast shows
warmer-than-average weather sweeping into the Pacific Coast, while
lower-than-usual temperatures are forecast in the Southeast.
US LNG feedgas requirements are expected to fall 1.8 Bcf day on day to 2.9 Bcf on Monday, contributing to the overall decrease in gas demand, according to Platts Analytics. US exports to Mexico are expected to continue at around 5 Bcf/d and remain there in the coming weeks. 

Source: Platts 2019

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