HOUSTON, Dec. 27 -- After climbing in previous sessions, the January natural gas contract price plummeted in the last 2 days of trading prior to the extended Christmas holiday amid expectations of warmer weather into the new year.
Natural gas for January delivery nose-dived by $1.35 to $12.92/MMbtu Dec. 22 on the New York Mercantile Exchange and continued to tumble, down another 64¢ to expire at $12.28/MMbtu Dec. 23, the lowest level since November. "The contract lost 12% since Dec. 22 on a retreating cash market and expectations [that] inventories of heating oil and natural gas are adequate to meet winter demand," said analysts at Enerfax Daily. "Warmer-than-normal weather is expected for most parts of the US until after the first of the year. Private forecasters predict that temperatures in the Northeast will average warmer than normal in January and March but colder than normal in February."
"There have been two post-Katrina-Rita gas price spikes," said Stephen A. Smith of Stephen Smith Energy Associates in Natchez, Miss., in a Dec. 26 report. "The first was in the immediate hurricane aftermath," he said. "Following a sharp correction, the second spike was driven by very cold weather in the first 3 weeks of December." That second spike he said, "has now rolled over in response to the very mild 2 weeks expected through Jan. 6."
The weekly average spot market gas price for natural gas at Henry Hub, La., lost $1.38 to $13.11/MMbtu in the week ended Dec. 23. During that same period, the weekly average price for Gulf Coast distillate fuel declined by 53¢ to the equivalent of $11.99/MMbtu, said Smith.
Other energy prices
The February contract for benchmark US light, sweet crudes gained 15¢ to $58.43/bbl Dec. 23 on NYMEX, while the March contract advanced by 14¢ to $59/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., lost 5¢ to $58.09/bbl. Heating oil for January delivery dipped by 3.47¢ to $1.71/gal. But gasoline for the same month inched up by 0.99¢ to $1.55/gal.
In London, the February contract for North Sea Brent crude increased by 14¢ to $56.69/bbl on the International Petroleum Exchange. However, January gas oil fell by $14.75 to $504/tonne.
The Vienna headquarters for the Organization of Petroleum Exporting Countries was closed Dec. 27 for a holiday, so no report on its crude sales was available.
Contact Sam Fletcher at firstname.lastname@example.org.