The NYMEX December natural gas futures contract, in its final day of trading Monday, jumped 14.7 cents to settle at $3.232/MMBtu as increasingly supportive weather forecasts bolstered the market.
The December contract has rallied over the last seven trading sessions, rising 52.9 cents since November 17 to expire Monday at the highest prompt-month expiration price since the December 2014 contract expired at $4.282/MMBtu.
Analysts at Tudor Pickering Holt in a market note Monday said that the weather/forecasts are "looking normalish" over the next three weeks, which could help to start the process of "pulling down storage overhang."
In addition, despite a slow start to winter demand, the possibility still exists for gas prices "to see $3.75[/MMBtu] Q1 prices" if cold weather patterns persist, the analysts said.
The latest six- to 10-day and eight- to 14-day outlooks from the US National Weather Service called for below-average temperatures across the western one-third of the country. Near-normal temperatures were forecast across much of the Northeast, which was a bullish departure from forecasts prior to the Thanksgiving holiday in the US. Above-average temperatures were expected to remain across the Upper Midwest and the Southeast.
Over the next seven days, US demand is expected to total around 79.6 Bcf/d, up more than 4 Bcf from the prior week, Platts Analytics' Bentek Energy data showed. Looking further out, demand in the eight- to 14-day range is expected to rise even higher, reaching an estimated 92.9 Bcf/d.
Meantime, US gas production is expected to hold flat over the next two weeks, reaching an estimated 71.6 Bcf/d, according to Bentek data.
Further out on the curve, the January contract rose 11.8 cents to settle at $3.32/MMBtu the day before trading as the prompt-month contract starts.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (0000 GMT Tuesday).
