After trading in positive territory for much of Wednesday, the NYMEX January natural gas futures contract slid 3.2 cents to settle at $3.603/MMBtu as the market consolidates ahead of the US Energy Information Administration's weekly gas storage report.
The January contract peaked 11.3 cents above Tuesday's settle, trading between $3.581/MMBtu and $3.748/MMBtu. Wednesday marked the second most active trading day for the January contract with an estimated volume of 223,133 Dth, the most active being Tuesday's trading session with 233,251 Dth.
The initial upward movement in the market was attributed to what Timothy Evans, energy futures specialist with Citi Futures, notes as a "firming back up [of the natural gas market] on what looks like an even more intense cold weather pattern" than previously thought.
The latest National Weather Service eight- to 14-day outlook lent additional credence to this trend by projecting a high probability of below average temperatures over the Upper Midwest and Northeast markets, supporting Platts Analytics' Bentek Energy latest national demand projections of 100.8 Bcf/d over the next eight-14 days.
However, projections for a below-average injection in the upcoming US EIA weekly gas storage report may have weighed on the prompt-month contract. According to a consensus of analysts surveyed by S&P Global Platts, the upcoming report will show a withdrawal of 40 Bcf, significantly below both the 69 Bcf withdrawn during the same time period in 2015 and the five-year average of 61 Bcf.
Further along the curve, the February contract slid 3.7 cents to $3.589/MMBtu, the third day in a row the February contract traded at a discount to the prompt-month. Backwardation persists throughout the remainder of the winter contracts, with a 5.3 cents spread between March and January.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (0000 GMT Wednesday).
