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Daily Market Update January 25, 2018

Early Morning Update

 

The Feb18 natural gas contract is trading up $0.03 at $3.54.  The Feb18 crude contract is up $0.94 at $66.55.


 

Summary

Natural gas trading on Wednesday opened the session up ten cents, further extending the rally from the previous day, but lost strength late in the day, spending some time in the negative region, before closing up 6.5 cents at $3.509.  Weather forecasts for the start of February have turned very cold for the Midwest, and the cold is expected to intensify into the second week of February.  At this point, it’s unclear how intense and prolonged this next front might be for the Northeast markets, which are enjoying a brief reprieve from the extreme cold and volatility experienced over the last several weeks.  The start of the new year brought record cold to much of the Northeast, sharply increasing heating demand and drawing heavily on gas storage.  With another strong cold front on the horizon, the market is contemplating the potential for freeze-offs to again limit gas production as heating demand accelerates, leading to a further decline in storage, which currently lags the 5-year average by nearly 12%.  The market is expecting a withdrawal this week of roughly 275 Bcf when the EIA releases the weekly storage report, which is a bullish projection when compared to last year’s withdrawal of 137 Bcf and the 104 Bcf 5-year average withdrawal.

 

 

Market Update 012518

Market Settles 012418

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