The NYMEX February natural gas futures contract settled at $2.139/MMBtu Friday, up 0.1 cent, after a trading day that saw little movement for the front-month contract in either direction.
Trading within roughly a 5-cent range this morning, traders seem to be showing no strong conviction on moving the contract in either position.
The Weather Service International six- to 10-day outlook, released Friday, calls for above-average weather in the Midwest, Rockies, and Midcontinent. Weather Service said that these regions will be between 8-15 degrees above average. Slightly below average temperatures can be seen in the mid-Atlantic. Friday's forecast is slightly warmer than Thursday's forecast. Weather Service's 11-15 outlook shows above average weather throughout the entire eastern half of the US. Abnormally warm weather is expected in New England, Appalachia, and the Southeast.
Looking even further out, National Weather Service released their February latest forecast, which calls for above-average temperatures along the West Coast, Rockies, Upper-Midwest, Appalachia, and Northeast. Below-average weather is expected along the Gulf Coast and Texas.
Despite warmer than normal weather in January thus far, US power burn levels have come in stronger than a year ago. Platts unit Bentek Energy shows month-to-date US power burn has averaged 26.1 Bcf/d, 2.1 Bcf/d higher than the same period a year ago. In contrast, residential/commercial demand has been 2.5 Bcf/d over the same time period, averaging 49.6 Bcf/d in January.
Even though demand has been light this winter, US supply continues to remain robust. Bentek data shows US demand averaging 71.3 Bcf/d in January. Demand is expected to increase 400 MMcf/d and average 71.7 Bcf/d over the next two weeks. These strong production levels are sustained in the face of record low levels of active drilling rigs. Bentek said the rig count in the Northeast has reached an all-time low since Bentek started recording data in early 2004.
For the weeks ending January 1 and 8, total rigs were 49, adding one for the week ending January 15. In fact, rigs in the Northeast have been below the historic low mark of 58, set on January 9, 2004, for the past four weeks and well-below the all-time high of 184 rigs on October 22, 2010.
The February contract traded in a range of $2.112-$2.168/MMBtu.
The NYMEX settlement price is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (0000 GMT).
