Daily Market Update January 5, 2018

Early Morning Update

The Feb18 natural gas contract is trading down $0.10 at $2.78.  The Feb18 crude contract is down $0.61 at $61.40.

Summary

The NYMEX prompt natural gas contract shrugged off the intense cold weather yesterday, and fell 12.8 cents to $2.88/MMBtu. Weather forecasts showing warming temperatures towards the back half of the month caused the market to tick lower despite the near-term cold snap. This current cold snap, though, is causing very high short-term prices for both gas and power in the Northeast due to pipeline constraints. The market seems to feel that after the frigid temperatures dissipate, short-term prices will move back to ‘normal’ as demand falls. But in the meantime, prices are as high as they’ve been since the polar vortex.  
Yesterday, the U.S. Energy Information Administration reported a draw of 206 Bcf, slightly below expectations.  Forecasts for next week are calling for potentially the highest draw ever, near 350 Bcf.  Current estimates for end-of-winter storage have been falling recently, and are now near 1.3 Tcf, well below the last few years.

Market Update 010518