Market Updates

Daily Market Update - February 17, 2016

Daily market update

Early Morning Update

The Mar16 natural gas contract is trading up $0.02 at $1.92.  The Mar16 crude contract is up $0.71 at $29.75.

Summary

Prompt month natural gas futures have fallen in the last five sessions, losing 11% of their value, to the lowest settlement in almost two months.  The Mar16 NYMEX contract settled at $1.903/MMBtu on Tuesday, down another 6.3 cents.  Like a broken record (skipping CD?), the 2017-2023 calendar strips, once again, hit fresh all-time lows, as well.  Weather reports show most of the country blanketed with above-normal temperatures through the end of the month.  Since about half of U.S. homes use natural gas as a primary heating source, a lack of winter cold is usually a bearish signal for gas prices.  The situation is aggravated this year because of the high levels of natural gas in storage.  Also, dry production is at a record high level, reaching 73.52 Bcf/d yesterday.  The question now is at what point will production be curtailed due to the collapse in gas prices?  Some producers are already operating at a loss to maintain debt service, but at some point, they may have to pull the plug.  Analysts are trying to determine what that point is, and if any cutback in production will cause a bullish reaction in the market.

Market Update 021716

Market Settles 021616

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