Market Updates

Daily Market Update - January 6, 2016

Daily market update

Early Morning Update

The Feb16 natural gas contract is trading flat at $2.33.  The Feb16 crude contract is down $1.20 to $34.77.

Summary

As the market looks past the current cold wave enveloping the country, there is growing concern over weak winter demand and the possibility of a natural gas storage glut.  Although the market reacted strongly to the present cold snap with gains in seven straight sessions, current weather models show a significant warm-up, which should suppress demand for natural gas and keep a ceiling on prices.  The Feb16 NYMEX contract lost 0.9 cent yesterday, settling at $2.325/MMBtu.  The U.S. Energy Information Administration reported yesterday that  natural gas spot prices at Henry Hub averaged $2.61/MMBtu in 2015, the lowest annual average since 1999.  Despite declining prices, natural gas production averaged 74.9 Bcf/d last year, an increase of 6.3% over 2014.  The uptick in production came as the number of natural gas drilling rigs in operation was cut in half throughout the year.  Low prices and strong production helped natural gas surpass coal as the leading source of electricity generation on a monthly basis for the first time in April, and again in each of the four months from July through October.  Power burn is projected to be 26.5 Bcf/d in 2015, exceeding the 24.9 Bcf/d level in 2012.

Market Update 010616

Market Settles 010516

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