Daily Market Update December 9, 2020

Early Morning Update

The Jan21 natural gas contract is trading up $0.10 at $2.50. The Jan21 crude oil contract is up $0.30 at $45.90.

Summary

Yesterday’s trading activity showed some reprieve from the recent sell-off. The prompt month contract lost just $0.007, opening the trading day at $2.406/MMBtu and closing at $2.399/MMBtu. The January 2021 contract has lost $0.56/MMBtu since the Thanksgiving holiday (talk about a black Friday special!). Above-average temperatures have mainly dominated the weather forecasts. While some cold days come and go, much of the country is experiencing warmer-than-normal temps, a recipe for lackluster heating demand. All the while, many analysts expected to see production of natural gas continue on a descending path as many producers warned that they were planning to curtail production. However, natural gas production is pushing 90 Bcf/day and northeast production in the Marcellus/Utica is reaching new highs, in the 34 Bcf/day range. What could turn this around? Several things could turn bullish: weather, production, technical trading, LNG demand. This could be a buying opportunity for customers who are looking to lock in low prices. Looking ahead, tomorrow’s EIA storage report is expected to report a withdrawal that is larger than the 5-year average.

Market Update 12 09 20