Natural Gas Pricing

Even with the EIA reporting on Thursday a larger than expected withdraw volume from storage, natural gas prices continue to fall. US gas in storage fell 76 Bcf to 3,880 Bcf for the week ending December 4th. The withdrawal from storage was above consensus expectations of a pull between 59 Bcf and 63 Bcf.

Weather forecasts continue to indicate relatively weak demand. WSI’s 11 to 15 day forecast from Thursday showed above average temperatures across much of the central and eastern US. Analysts in the industry note that it’s going to be very warm in all the wrong places as the midcontinent and eastern US are typically the large consumers of natural gas this time of year.

Since November 1st, midcontinent daily index prices have averaged around $1.95 per MMBtu, with $1.705 being the lowest price posted during this time, and $2.155 being the highest price posted. Last year for this same time period, $3.21 was the lowest price posted and $4.695 was the highest posted price.

The projected average for the NYMEX futures monthly contracts is $2.66 per MMBtu for the next 24 months. During the winter months the futures contracts are forecasted to be around $3.00, and during the non-peak months they are projected to fall to around the $2.30 – $2.40 mark.