Daily Market Update December 5, 2017

Early Morning Update

The Jan18 natural gas contract is trading down $0.07 at $2.91.  The Jan18 crude contract is down $0.07 at $57.40.

Summary

The January natural gas futures contract settled down 7.6 cents to settle at $2.985/MMBtu on Monday, falling under $3.00 for the first time since trading as the prompt month. Calendar years 2018 through 2020 lost 4-5 cents, while there was minimal movement in calendar years 2021 and beyond.  Frequent forecast changes for the middle of December have been a cause of recent volatility in short-term pricing, and warmer changes on Monday helped prices turn to the downside.  While next week is still expected to bring moderately below-normal temperatures to the eastern half of the country, the severity of the cold was tempered in yesterday’s model updates. Supply remains strong, with production around 5.0 Bcf/day greater than in December 2016. While U.S. demand currently remains in check, the forecasted demand over the next two weeks is expected to increase by nearly 40%, which could bring our strongest storage withdrawals of this winter so far.    

Market Update 120517pdf