A shift from bitter cold to normal to above-normal temperatures in the
eastern two-thirds of the nation has pushed the front-month natural gas NYMEX
contract to below $4 per MMBtu. “Both
fundamentals and technicals are bearish right now for natural gas,” says Valerie
Wood, President of Energy Solutions, Inc.
“Everything is taking a back seat to moderating temperatures and robust
production.”
Wood warns that Thursday's weekly storage report could reflect a
withdrawal of between 195-215 Bcf, which could place some upward pressure on
natural gas prices. “However, the
anticipation of moderating temperatures is trumping any other natural gas price
drivers,” says Wood.
Current natural gas market dynamics and recommended actions to take are
discussed in more detail in Energy Solutions, Inc. weekly Natural
Gas Price Outlook. For now, all
indicators point to further price downside, but there is still 1-1/2 months of
winter remaining, so Wood doesn’t expect a major price collapse at this
time. However, Wood warns that spring
marks a shoulder season where there is little need for natural gas for heating
needs and minimal need for natural gas for cooling needs. "If the rig count
fails to decline and production remains robust, natural gas prices have the potential to slide toward $3.50 per MMBtu
at some point this summer.
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About Energy Solutions, Inc.
