Despite improving weather forecasts, the price of the December 2021 NYMEX contract rallied to close at $5.447 on Friday. This is the highest the December contract has settled since 2018 and the first settlement above $5 since
2008. Prices for monthly contracts saw a similar move higher on low trading volume, resulting in most contracts through the end of 2022 rising over 6% on average versus the week prior.
In the first day of trading as the front month contract, January 2022 plunged 6.64% on the bearish weather news along with renewed fears of a new COVID strain dampening global demand forecasts. The price spread between the March and April contracts, referred to as the “widowmaker” due to its volatility, has decreased to less than $0.50 after reaching as high as $1.50 a month ago. This seems to be a sign that fears over end-of-season storage inventory levels are beginning to ease. If 30 and 60 day weather forecasts continue to show above-average warmth, expect to see further selloffs of the Jan/Feb/Mar NYMEX contracts. For more information about the natural gas markets and our price forecasts contact us.
EIA Storage Report
For the week ending 19 November, the EIA reported a withdrawal of 21 Bcf from underground storage. Total inventories now sit at 3,623 Bcf which is a deficit of 320 Bcf to last year’s level but only 58 Bcf below the five-year average. Daily US dry production fell off slightly to an average 95.83 Bcf/d. While it appears that we’ll see another withdrawal reported this week, above-average weather temperatures forecasted for the first two weeks of December across the majority of the Lower 48 could result in a late in the year injection being reported. The NUS model shows a withdrawal ranging between 55 and 62 Bcf being reported on this week’s storage report.
The information above is an excerpt from the applicable report referenced above. For a full and complete copy of this report please complete the form below, sign up for our newsletters or schedule a virtual meeting at your convenience.