An uneventful week of trading on the NYMEX natural gas market ended with the prompt month May 2019 contract settling less than 1 penny from where it started. Trading was limited further out on the curve as well, with each of the benchmarks seen here moving about the same amount. The one metric of note is the winter 2019-2020 strip, which only increased 1.3 cents but in doing so inched over the $3 mark.
Despite a lack of a week over week change, there was some slight intraweek movement. The prompt month started off the week trading up 4 cents and settled at $2.708 on Monday. Throughout the week, prices slowly ticked back down until they settled right where things began on Friday.
Natural gas production levels were down slightly week over week and currently sit at 86.37 BCF/day. After reaching a peak in late March of over 88 BCF/day, production has fallen off just a bit and has been stable in the 86 BCF/day range for the majority of April. Maintaining healthy production levels will be key to managing the storage deficit after prolonged cold temperatures in March led to additional triple digit withdrawals.
Speaking of storage, an injection of 25 BCF was announced in last week’s inventory report which marked the second injection of the season and the end of the withdrawal season unless weather forecasts take a dramatic turn. Last year we recognized one of the latest ends to a withdrawal season in recent memory. Despite a cold March, this year’s withdrawal season ended a week earlier than the 5 year average.
The NOAA 6-10 Day Outlook is currently forecasting warmer than normal temperatures through most of the US with the exception of the extreme Southeast and Northwest parts of the country. If forecasts continue to stay on the warmer side, natural gas demand may shift from heating demand to power burn rather quickly. So far, the power markets have not reacted to this possibility, as most markets increased only a few pennies on the week.
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