MARKET WATCH: NYMEX natural gas prices dip on warmer forecasts

Natural gas prices for March delivery were volatile during Feb. 5 trading on the New York market, briefly reaching a 4-year high before closing for the day down by 3.45¢/MMbtu from the Feb. 4 settlement, and analysts attributed the closing decline to forecasts calling for warming temperatures.

The New York Mercantile Exchange gas futures contract experienced wide swings during Feb. 5 trading. The March contract closed at $5.03/MMbtu, after dipping to $4.99/MMbtu and spiking to a rounded $5.74/MMbtu, which was the commodity’s highest level since Jan. 25, 2010.

Analysts cited weather forecasts for warmer temperatures, saying gas prices easily could dip to below $5/MMbtu yet this week. Accuweather forecasters are calling for temperatures in New York City to reach 30° F. on Feb. 7 although snow is possible during the weekend.

The US Energy Information Administration on Feb. 6 estimated working gas in underground storage at 1.923 tcf as of Jan. 31. That represented a net decline of 262 bcf from the previous week. Stocks were 778 bcf lower than last year at this time and 556 bcf below the 5-year average of 2.479 tcf.

Meanwhile on world oil markets, the gap between US light, sweet crude and Brent crude for March delivery has narrowed to under $9/bbl, marking the smallest spread since October 2012. Labor unrest in Libya has reduced oil exports since the first half of 2013.

In a research note from Citi Futures Perspective, analyst Tim Evans of New York noted a Feb. 20 election is scheduled in Libya for a new constitutional commission. In addition, talks continue between the government and labor protesters regarding the operating status of oil export terminals in Eastern Libya.

Energy prices

The NYMEX March crude oil contract closed Feb. 5 at $97.38/bbl, up 19¢. The April contract gained 30¢ to settle at $96.76/bbl.

Heating oil for March delivery increased 1.39¢ to a rounded $3/gal. Reformulated gasoline stock for oxygenate blending for March delivery rose 3.8¢ to a rounded $2.64/gal.

On the US spot market, the gas price at Henry Hub climbed $1.80, closing at $7.45/MMbtu.

In London, the March ICE contract for Brent crude delivery was up 47¢, closing at $106.25/bbl. The April Brent contract gained 49¢ to $105.66/bbl. The ICE gas oil contract for February was down $7.25 to $899/tonne.

The Organizational of Petroleum Exporting Countries reported its basket of 12 benchmark crudes closed Feb. 5 at $102.63/bbl, up 8¢ from the previous day.

Contact Paula Dittrick at paulad@ogjonline.com.

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