Daily Market Update January 4, 2017
Early Morning Update
The Feb17 natural gas contract is trading down $0.02 at $3.31. The Feb17 crude contract is up $0.12 at $52.45.
Summary
During the first day of trading in the new year, the Feb17 prompt month contract fell by 39.7 cents, or 10.66%, Tuesday to settle at $3.327/MMBtu. Large price declines, ranging from 18 to 40 cents, were seen yesterday from the prompt month through the March 2018 contracts, while longer term strips were mostly unchanged. A correction seems underway as gas prices neared $4 during the holiday week due to limited liquidity. Weather forecasts continue to be a primary driver in near-term gas prices. While most of the country is expected to see temperatures below the 30-year average through this weekend, forecasted below-average temperatures should be short lived, lingering only through the weekend and expected to warm back up early next week. Additionally, the National Weather Service increased the probability of warmer-than-average temperatures for the southern half of the United States in their 6-10 and 8-14 day forecasts yesterday. With a tight U.S. supply demand balance, weather forecasts will continue to have a large impact on market prices through this winter. Winter weather has proven unpredictable so far, and a change in the forecast could easily cause prices to jump.
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