MARKET WATCH: NYMEX natural gas futures prices fall

Natural gas futures price for February delivery dipped by more than 8¢/MMbtu on the New York market during Jan. 8 trading because analysts said forecasts for warmer temperatures likely means less gas demand in coming weeks.

Meanwhile, NYMEX crude oil prices fell by more than $1/bbl on Jan. 8, and analysts said the market needed direction given uncertainty about Middle East crude oil supplies, particularly Libya and Iraq.

In the US, cold temperatures across the Midwest and along part of the East Coast this week caused equipment problems for some pipelines and refiners.

The weekly natural gas storage report from the Energy Information Administration showed an estimated 2.817 tcf as of Jan. 3. That represented a net decline of 157 bcf from the previous week and marked lower levels of underground storage than are typical for this time of year.

Stocks were 528 bcf less than last year for the same period and 315 bcf below the 5-year average of 3.132 tcf.

Stephen Schork, editor of the Schork Report, an energy newsletter, said the warmer-weather forecasts already swayed traders and gas prices.

“Next week’s [storage withdrawal statistics] will be massive,” he said of the Jan. 16 report. Analysts and traders agreed that next week’s statistics will reflect the Jan. 6-7 frigid temperatures.

Separately, Barclays Research issued a Jan. 9 research note saying that it believes declining natural gas imports to the US have gone largely unnoticed.

“Net natural gas flows into the country have dropped 67% from their peak in 2007, and the US is on track to become a net natural gas exporter,” Barclays analysts said, adding that they expect the US could become a net gas exporter in 2016.

“For US natural gas markets, this should be a key driver of strengthening prices and create a link between US and global ones. Globally, the rise of the US as an LNG exporter will have far-reaching consequences,” they said.

Energy prices

The New York Mercantile Exchange February crude contract was down $1.34 on Jan. 8, closing at $92.33/bbl. The March contract dropped $1.31 to settle at $92.53/bbl.

Heating oil for February delivery fell nearly 1¢ to a rounded $2.95/gal. Reformulated gasoline stock for oxygenate blending for February delivery also fell, dropping 2.2¢ to a rounded $2.66/gal.

The February natural gas contract on NYMEX was down 8.3¢, settling at a rounded $4.22/MMbtu, which was that commodity’s lowest settlement since Dec. 6. On the US spot market, the Jan. 8 gas price at Henry Hub fell 18¢ to settle at $4.35/MMbtu.

In London, the February ICE contract for Brent crude oil dropped 20¢ to close at $107.15/bbl. The March Brent contract was down 28¢, settling at $106.71/bbl. The ICE gas oil contract for January gained $1.75¢ to $912.25/tonne.

OPEC’s basket of 12 benchmark crudes for Jan. 8 was $104.50/bbl, down 8¢ from the Jan. 7 settlement.

Contact Paula Dittrick at paulad@ogjonline.com.

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