Daily Market Update January 28, 2021

Early Morning Update

The Mar21 natural gas contract is trading down $0.05 at $2.65. The Mar21 crude oil contract is up $0.35 at $53.20.

Summary

Once again, the short-term natural gas market climbed higher yesterday in response to progressively frigid weather forecasts across the major centers of demand in the U.S. Week-over-week, temperature highs for the next few days in the Northeast and Midwest that were previously expected to reach the mid-30s and 40s have had colder revisions down into the low-to-mid 20s and 30s. Demand for gas across these regions, including Texas, is expected to see an uptick of nearly 10 Bcf/d. As a result, the February contract experienced the most movement within the 12-month strip yesterday, gaining ten cents before expiring at $2.760/MMBtu. This settlement price is $0.10/MMBtu below the February average settlement for the last five years, but nearly $1.00/MMBtu higher than last year. The rest of contracts within the 12-month strip also strengthened, but less, within the range of $0.01 to $0.06/MMBtu. Today’s storage report is expected to fall within the range of -143 Bcf to -128 Bcf, which would be much less than the 174 Bcf five-year average withdrawal. However, given the upcoming cold, next week’s withdrawal is likely to surpass the five-year benchmark and add further strength to forward prices.

Market Settles 01 27 2021