Daily Market Update January 16, 2020
Early Morning Update
The Feb20 natural gas contract is trading up $0.01 at $2.13. The Feb20 crude oil contract is up $0.24 at $58.05.
Summary
The NYMEX natural gas prompt month contract experienced a $0.067 drop yesterday on the heels of more moderate weather forecasts. The prompt month settled at $2.12/MMBtu, which is the same level as its all-time low that was set on January 2. This enthusiasm was primarily felt at the front of the curve, as Cal '21 lost just a penny, and Cals '22-'27 remained flat. While colder-than-normal temperatures are still projected, they're not as widespread and do not deviate as much from the 30-year normal as previously forecasted. Winter '19-'20 weather forecasts were calling for a higher chance of a back-weighted winter, which would translate into harsher conditions starting to roll in around this time of the year. If that doesn't materialize, and all other fundamentals such as strong production and strong storage levels hold true, we could see the NYMEX prompt month contract continue to weaken even more. Later on today, the EIA will release their weekly storage report, where market participants are expecting an 93 Bcf withdrawal. This is slightly larger than the withdrawal reported at this time last year, but less than half the amount of the 5-year average benchmark.
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