Stay up to date on the latest information and changes that may impact natural gas and electricity pricing.
The NYMEX natural gas market continued its recent slide last week with the prompt month November 2019 contract dropping over 13 cents, or 5.9%, on the week. The 12-month strip and winter 19-20 strip followed suit as well. Both benchmarks shed between 8 and 9 cents on the week, which brought the winter average back down to sub $2.50 levels after a brief run up earlier this month. Longer term metrics saw bearish movement as well, but not quite as obvious. For instance, the 36-month strip dipped a little less than 5 cents on the week.
Most of this movement happened on two trading days, Monday and Wednesday, where the prompt month lost about a nickel on both days. The rest of the week was filled with small dips in day-to-day movement, and Friday saw the winter 19-20 and 12-month averages gain back a small amount of what they had shed throughout the week.
Thursday’s inventory report brought news of a 98 BCF injection into storage. This number was on the lower end of expectations, but still well above injections in recent years for the same week. This injection brings us within 9 BCF of the 5-year average, and with analysts anticipating the next few reports to circle 100 BCF, we could very well find ourselves eclipsing the 5-year average within the week.
Weather forecasts for the next couple of weeks are currently somewhat mixed. For the remainder of this week, many regions of the country are expected to see normal to slightly below normal temperatures. Some warmth is expected to enter the picture by early next week, but then a return to seasonal temperatures is anticipated by the end of the week. While none of these temperature swings are significant, it is important to remember during the month of October that a few degrees variance could make a difference as to whether end users turn on their furnaces.
Power prices were right in line with gas prices last week, with most markets dropping a few cents on the week. The biggest swing was seen in the Massachusetts market where costs dropped nearly 5%. While the weather forecast above mentions a return to above normal temperatures early next week, it is worth mentioning that at this point in the season, warmth in the forecast is more of a bearish signal for natural gas than it is a bullish signal for power.
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