Daily Market Update February 6, 2017
Early Morning Update
The Mar17 natural gas contract is trading down $0.05 at $3.01. The Mar17 crude contract is down $0.13 at $53.70.
Summary
The current February weather forecast looks to be a copy of January, which registered as the 6th warmest on record since 1950. As a result, much of the trading focus has shifted towards the shoulder months of springtime. The March delivery contract opened flat from Friday’s close this morning at $3.06/MMBtu, which is now down 12 cents (4%) since its debut, but is already headed lower and looks to challenge the $3.00 technical support level. Mild weather has reduced the rate of erosion of natural gas stockpiles, which have flipped to a surplus compared to the five-year average. For those who are bullish, hope remains for an early February cold injection in the Midwest and Pac-Northwest, potentially bringing end-of-season inventories back below the five year average to a still healthy 1.74-1.8 Tcf. The lagging fear of next year’s winter has kept 2018 Q1 power prices propped up nationwide, while (outside of New England) the majority of outer calendar strips are within 10% of all-time lows.
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