Natural Gas Market Newsletter: Week of December 2-8, 2024
Weather and Demand Outlook
The weather continues to be the primary driver of natural gas markets, with recent cold spells bringing more buyers into the market. However, the outlook is shifting:
- – Forecasts now predict warmer or average temperatures across the U.S.
- – Below-average demand is expected, pushing prices down to near $3.20
- – Further price drops are possible if forecasts trend even warmer
- – Meteorologists anticipate more short-acting polar vortexes this winter due to a weak La Niña
Key Insight: January pricing remains among the lowest since 2013, despite recent fluctuations.
Regional Weather Breakdown
Midwest, Ohio Valley, and East
– Frosty systems bringing rain and snow
– Highs: 10-30°F, Lows: 0-20°F
– Impact: Strong natural gas demand
Texas, South, and Southeast
– Lows: 20-30°F
– Impact: Increased heating demand
Western U.S.
– Mild and mostly dry conditions
– Highs: 40-70°F
– Impact: Lower demand due to high-pressure system
Overall Outlook: High national demand, driven by cold temperatures in the eastern half of the U.S.
Supply Considerations
- – Presidential election impact on gas & oil prices expected to be minimal
- – Private companies control production, prioritizing profits over price manipulation
LNG Demand
– Exports near 2024 high at just above 14 bcf/d
– Recent election may accelerate LNG facility permitting
– Potential for higher prices in coming years if production doesn’t match demand growth
Natural Gas Storage Report
January NYMEX Futures (since 2013)
Natural Gas Production Report
NYMEX 12-Month Strip
ALL ABOUT THE NYMEX TWELVE-MONTH STRIP
• The NYMEX Twelve Month Strip is the average of the upcoming 12 months of closing Henry Hub natural gas futures prices as reported on CME/NYMEX.
• A futures strip is the buying or selling of futures contracts in sequential delivery months traded as a single transaction.
• The NYMEX Twelve Month Strip can lock in a specific price for natural gas futures for a year with 12 monthly contracts connected into a strip.
• The average price of these 12 contracts is the particular price that traders can transact at, indicating the direction of natural gas prices.
• The price of the NYMEX Twelve Month Strip can show the average cost of the next twelve months’ worth of futures.
• The NYMEX Twelve Month Strip is also used to understand the direction of natural gas prices and to lock in a specific price for natural gas futures for a year.
NYMEX Rolling Prompt Month
Spotlight on NYMEX Rolling Prompt Month: This chart shows continuous price movement of the nearest-term futures contract, providing a seamless view of price trends by automatically switching to the next month’s contract as the current one expires.
