Natural gas prices took a tumble for most of the week because of the unusual weather patterns in the US brought on by the polar vortex.
“Natural gas prices tumbled on the week as the freezing weather pushed south by the unusual polar vortex left the Midwest and the Northeast,” noted Shiyang Wang, analyst with Barclays Capital Inc., in a commodities research note. “The backwardation on the curve became much less pronounced, with the balance of calendar 2014 and calendar 2015 down by 4.2% and 3.2%, respectively, for the week,” Wang said.
“As the polar vortex leaves the Northeast and the Midwest, warmer-than-normal weather forecasts have shored up in the horizon. Nevertheless, there is a possibility that the polar vortex could return in a week’s time,” Wang warned, adding, “Meanwhile, production is recovering from well freeze-offs in the Rockies and the Southwest. However, the recent extreme temperatures have affected Northeast production.”
Wang concluded, “With weather trends turning warmer than normal in the near term, freeze-offs in the Northeast should recover rather quickly. Nevertheless, in the near term, market balances remain quite tight.”
Heating oil for February delivery fell 2.8¢ to a rounded $2.92/gal. Reformulated gasoline stock for oxygenate blending for February delivery relinquished 1.37¢ to a rounded $2.64/gal.
The February natural gas contract on NYMEX was down 21.1¢ to settle at a rounded $4.01/MMbtu. On the US spot market, the Jan. 9 gas price at Henry Hub lost 21¢ to settle at $4.14/MMbtu.
In London, the February ICE contract for Brent crude oil declined 76¢, closing at $106.39/bbl. The March Brent contract was down 75¢ to settle at $105.96/bbl. The ICE gas oil contract for January dropped $5 to $907.25/tonne.
OPEC’s basket of 12 benchmark crudes for Jan. 9 was $104.35/bbl, decreasing 15¢ from the previous day.