Daily Market Update November 5, 2018

Early Morning Update

The Dec18 natural gas contract is trading up $0.27 at $3.55. The Dec18 crude contract is up $0.36 at $63.50.

Summary

On Friday, the December 2018 NYMEX natural gas contract surged higher by 4.7 cents on the day to settle at $3.284/MMBtu, after a volatile day of trading between $3.166/MMBtu and $3.313/MMBtu. The storage deficit remains a bullish factor, almost 17% below the 5-year average, with only two more injections estimated to close out this season. Weather forecasts are also a major fundamental adding to the upward pressure to winter pricing, since Friday forecasts have taken a significant shift, with some large degree-day changes over this past weekend. The 6-10 and 11-15 day forecasts are predicting a huge blanket of colder-than-normal temperatures for the majority of the country, before moving mostly to cover the eastern half of the country and south through Texas. As we see these major demand center regions for natural gas cool throughout this month, we could see even more volatility to winter pricing, with storage levels so low and Rescomm sector demand increasing. After hitting a new record last week of 85.5 Bcf/d, U.S. dry production remains at a healthy level, hovering just under 85 Bcf/d, up 8.6 Bcf/d compared to last year at this time.

Market Update 110518