A bullish weather forecast for much of the US provided a boost for gas futures coming out of the four-day Thanksgiving holiday, with NYMEX December settling Monday at $2.928/MMBtu, up 11.5 cents from Friday's close.
At the same time, the January contract rose 10.1 cents to settle at $3.017/MMBtu.
Phil Flynn, senior market analyst at Price Futures Group, said the price jump was largely related to a change in the long-term weather forecast.
"Well, what happened is that on Friday the weather forecast changed," Flynn said. "We had been expecting warmer weather throughout December, but now it's looking like it's going to be a little colder in late December.
"It's really kind of amazing how often the weather forecast changes. We were looking at global warming, now it seems that winter is making a comeback."
According to the US National Weather Service, the forecast for December calls for colder-than-normal weather for much of the northern US, particularly in the major demand areas of the Northeast, Midwest and Northwest, and near- to slightly above-normal temperatures in the southern US.
With the weather outlook providing support, Flynn also said that with the calendar closing in on December, trading action is moving to the January contract, boosting both.
"The rise [in the front-month contract] is also related to the fact that we are in that rollover period, where people are starting to trade for January," he said.
Production looked to remain steady Tuesday, with Platts Analytics' Bentek Energy data at 76.7 Bcf/d, near the seven-day average of 76.69 Bcf/d.
"Production is strong right now and not because people necessarily need natural gas," Flynn said. "It's indicative of the higher oil rig count and the associated gas that comes with those rigs."
The NYMEX settlement price is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (2400 GMT).
