Daily Market Update March 16, 2017
Early Morning Update
The Apr17 natural gas contract is trading down $0.06 to $2.91. The Apr17 crude contract is up $0.33 at $49.19.
Summary
Has winter finally arrived after one of the warmest Jan-Feb periods on record? It certainly feels like it. Most would not characterize the winter thus far as blustery, but, this week, things changed sharply, with a strong burst of cold bringing windy and snowy conditions across much of the Northeast. Near-term natural gas prices have responded, with the 12-month strip adding nearly 10% since the middle of February after breaking below $3.00 for the first time since Mid-November. The prompt month topped out around $3.09 on Monday, but has given some ground and closed the session yesterday at $2.981/MMBtu. The combination of lagging production and cold weather has forced the end-of-season storage projections back towards the 5-year average, with current estimates hovering around 1.95 Tcf. The market is expecting a 58 Bcf withdrawal when the EIA releases their weekly storage report this morning, compared to a 9 Bcf pull last year and a 5-year average withdrawal of 85 Bcf. The cold weather we’re experiencing this week will affect next week’s withdrawal, which is currently expected to reduce stocks by a whopping 162 Bcf, which compares to a 13 Bcf injection last year and a 5-year average withdrawal of 21 Bcf.
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