Home > Chemical News

Chemical News

NYMEX February gas settles at $2.835/MMBtu, down 13.9 cents

https://www.chemnet.com   Jan 23,2015 Platts
The NYMEX February natural gas futures contract dropped 13.9 cents Thursday to settle at $2.835/MMBtu on the back of weaker-than-expected gas storage data.

US natural gas in storage fell 216 Bcf to 2.637 Tcf for the week ended January 16, the EIA said Thursday.

The net withdrawal was below consensus expectations of a pull of 222-226 Bcf. EIA in the corresponding week of 2014 reported a 133-Bcf withdrawal, while the five-year average is a 176-Bcf draw.

Teri Viswanath, BNP Paribas analyst, described Thursday's withdrawal as "slightly weaker than anticipated," but acknowledged that around noon EST the February contract was trading near a 28-month low as some traders saw slightly warmer weather forecasts.

"We clawed back some of those losses, but certainly the market has a relatively bearish outlook based on real concerns that the industry will not sufficiently pare inventories by the end of winter," Viswanath said.

"As we get toward the end of January, the market is getting to the position that really no matter what happens in February and March, the variable weather patterns are showing that destocking is once again not going to re-accelerate," Viswanath said. "It's a very, very bearish market. ... What had been a $3 price floor has been converted to a ceiling."

Richard Hastings, Global Hunter Securities analyst, said the next two natural gas storage reports are likely to be light.

"However, forecasts are still trending quite cold for the end of January and all of February, with a potentially large geographical involvement," Hastings said.

Weather forecaster WSI said Thursday that "the much-anticipated cold pattern that is expected to gradually develop during the [six- to 10-day] period is expected to establish itself during the [11- to 15-day] period."

"As a result, the forecast depicts rather widespread below-average [temperatures] across the central and eastern US with anomalies upward of 5-15 [degrees Fahrenheit] below average across the Northeast," WSI said. In the East, only Florida escapes the [11- to 15-day] forecasts' call for below-average temperatures.

If February and March trend colder than normal, the US natural gas market could be much tighter this spring than currently expected, Hastings said, "overlaying a tighter natgas market with lower coal capacity during summer 2015."

The February gas contract traded Thursday in a range of $2.766-$3.048/MMBtu.

The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (0000 GMT Friday).
 Print  |    add to Favorites  |    Close