Daily Market Update February 1, 2018

Early Morning Update

The Mar18 natural gas contract is trading down $0.08 at $2.91.  The Mar18 crude contract is up $0.62 at $65.35.

Summary

Overbought conditions, warmer weather outlooks, and a slowdown in storage withdrawals all combined to help  push the March natural gas contract much lower on Wednesday. The prompt month lost 20 cents yesterday, settling just under $3, at $2.995/MMBtu. Weather outlooks still show some frigid temperatures encroaching the Northern Plains and the Great Lakes regions over the next ten days, but the cold mass is not expected to reach as far south, nor be as cold, as previously forecast. Estimates for the weekly storage withdrawal range widely, from 89 to 128 Bcf, with a consensus formed around a 100 Bcf pull. This compares bearishly to the 160 Bcf drop in inventories normally seen for this time of year. Heating degree days were down 25% from average for the reporting week, and the effects of the warmer weather were twofold: demand for natural gas was down significantly, and production soared to record levels as it recovered from well freeze-offs.

Market Update 020118