Market Updates

Daily Market Update December 22, 2016

Daily market update

Early Morning Update

The Jan17 natural gas contract is trading up $0.02 at $3.56.  The Jan17 crude contract is down $0.14 at $52.35. 

Summary

Changing market dynamics have caused big swings in recent weeks in the near-term natural gas market. Trading Wednesday continued this trend, with the Jan17 contract adding 27.9 cents to finish the day  at $3.542/MMBtu. The 2017 calendar strip followed suit, adding 18 cents to close at $3.457. Despite near-term weather forecasts trending warmer in recent days, the market is coming to grips with the fact that demand for natural gas is increasing in almost all sectors. Most notably, rising demand in the power generation sector has been evident all year, as low prices have led to a record amount of coal-to-gas switching. Industrial demand has been on the rise, with 2016 adding ~1.0 Bcf/d when compared to the 5-year average. Cold weather over the last several weeks has led to a spike in heating demand, which impacted storage levels, flipping the surplus to last year to a deficit, and should soon reverse the 5-year average surplus, as well. Though demand year-over-year is up, dry gas production is lagging and is currently down 1 to 2 Bcf/d when compared to 2015. The question remains, “At what point will higher prices lead to an increase in production?” Current estimates indicate an expected withdrawal of ~205 Bcf when the EIA reports the weekly storage change this morning.

Market Update 122216

Market Settles 122116

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