Natural gas prices were lower across the board in today's session with the spot January 16 contract down by 3% and nearly every forward strip trading down to new all-time lows.
Longer range weather forecasts updated today extended above-normal temperatures across much of the U.S. into late-February suggesting lower than normal weather-related heating demand for natural gas.
With current storage at a new all-time high of 4,009 Bcf, a very cold winter is needed to drawdown stocks with production remaining high.
There has been recent news regarding lower drilling permits in the Northeastern U.S. production area which is responsible for much of the natural gas production growth since 2008. Total U.S. production has fallen from a high of 74.3 Bcf per day (dry-gas) from last December to 70.9 Bcf per day by November 2015 but is expected to begin to rise this month.
The spot January 16 futures contract currently trading at 2.175 is nearing key support beginning at the 2.051 low set by the December 15 contract followed by the 1.948 low set in October. This will be a key technical test for the market as this is the level the market last bottomed in April 2012.
The EIA weekly storage report due tomorrow is expected to show the first draw of 2016. The three previous storage reports during November have all been injections.
Production will also be updated for the first time in two weeks by the EIA in the Weekly Natural Gas Update.
No comments:
Post a Comment