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NATURAL GAS: NYMEX 12-MONTH ROLLING STRIP (NOV-OCT)

In September, natural gas demand fell sharply in all sectors, from residential and commercial to industrial. This is likely due to mild weather throughout the country and no actual heat demand until this last week. Below average temps are moving across the country, so look for higher heating demand in the next week or two.

Prompt month gas climbed above $3.00 for the first time in months. Cutbacks in rigs, increasing demand this summer, and expected cuts in production are the main culprit here. This is despite lower demand in September.

NYMEX 12-MONTH ROLLING STRIP (NOV-OCT)

FYI: 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.

CHART: NATURAL GAS DEMAND WITH EXPORTS

natural gas demand chart

European countries are finding alternatives to Natural Gas, with countries like the UK seeing lower demand last month. Germany is looking at firing up old coal plants while renewables ratchet up, and Norway has accelerated natural gas exploration and production. LNG imports for Europe are still expensive (about $30.00 per MMBtu).

However, LNG exports for the US are expected to rise dramatically this winter because demand is still high in countries like China and Brazil.

EIA: WEEKLY NATURAL GAS STORAGE

EIA: WEEKLY natural GAS STORAGE

US gas injections continued to be weak this summer, and we will be lucky to have a surplus by the withdrawal season starting in November. Our natural gas surplus over the 5-year average, at one time over 17%, is now down to 5.3%.

NATIONAL WEATHER: 6-10 DAY AND 8-14 DAY OUTLOOK

NATIONAL WEATHER: 6-10 DAY AND 8-14 DAY OUTLOOK

Today, a weather system is set to traverse the Midwest, bringing temperatures from the 40s to the 60s. As the weekend approaches, it will continue its journey towards the East, joining forces with the diminishing tropical system Phillippe, resulting in substantial rainfall in the Northeast.

Looking ahead to next week, expect additional weather systems to traverse the Midwest and Northeast, accompanied by temperatures in the 50s.

Meanwhile, the rest of the United States will experience comfortable temperatures in the 60s to 80s, with hotter conditions in California and the Southwest reaching the 90s. Overall, anticipate a shift from light demand to moderate or seasonal conditions.