Daily Market Update January 8, 2019

Early Morning Update

The Feb19 natural gas contract is trading up $0.05 at $2.99. The Feb19 crude contract is up $0.78 at $49.30.

Summary

More downward movement in the near-term has followed mild weather and steadying production, with much of the same on the horizon. The February prompt month dropped below $3, a 10 cent move downward to $2.944. The 12-month strip is essentially flat at $2.802, 2020 is up 1.7 cents to $2.664, and 2021 is up less than a penny at $2.622. After a few weeks of decreasing production over the holidays, supply is finally beginning to recover, with averages estimated to be in the mid-to-upper 84 Bcf/d range. The mild weather is doing its part as well, with warmer-than-normal temperatures dictating the majority of the 27% decrease in year-over-year demand. While we saw record high LNG sendout over the weekend of 5.5 Bcf/d, the warmer weather more than makes up for this increase. The deficit is hopefully looking to shrink over the next few weeks of calm weather and strong year-over-year supply, as withdrawals from storage this year are only about one quarter of the very robust levels seen during the frigid temperatures in 2018.

Market Update 010819