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NYMEX March gas holds steady, settles at $2.587/MMBtu

Houston (Platts)--14 Feb 2018 339 pm EST/2039 GMT


The NYMEX March natural gas futures contract was relatively unchanged Wednesday, settling 0.7 cent lower at $2.587/MMBtu, as the market took a break from what has been a volatile month so far.

Despite record US demand and gas storage numbers that are well below the five-year average during February, the NYMEX front-month contract has experienced sharp declines since March took over as the front-month contract, as forecasts of warmer-than-average weather and strong production have driven prices down.

Wednesday's small price movement takes a step back from drops experienced lately in the front-month contract, as the contract has fallen $1.04, or 28.6%, over the prior 12 trading days.

JJ Woods Associates President John Woods said the market dip throughout February "has been an overreaction to the downside" as concerns of strong output and warmer weather pressured the front-month contract from the $3.60/MMBtu level seen just a few weeks ago.

"Just like prices were too overdone" at $3.60/MMBtu, the market is likely to correct the overreaction as "prices will reach $3[/MMBtu] shortly" awaiting "some news," Woods added.

But that news did not arrive Wednesday, as US demand is projected to slide in the coming weeks, averaging 81.8 Bcf/d over the next seven days, down 9.6 Bcf/d from the 91.4 Bcf/d average over the previous seven days, according to S&P Global Platts Analytics.

The projected demand drop could be partly attributed to the most recent six- to 10-day weather outlook from the National Weather Service, which calls for a high probability of warmer-than-average weather along the East Coast, Southeast and demand centers in the Midwest.

Although the forecast for warmer weather will likely lead to below-average storage withdrawals in the coming weeks, the draw for last week is projected to be well above average because of the cooler weather seen that week. A consensus of analysts S&P Global Platts surveyed expects a 183-Bcf withdrawal for the week that ended February 9, above the 154-Bcf pull averaged over the past five years, according to US Energy Information Administration data.

The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (2400 GMT).

--Tyler Schwartz, tyler.schwartz@spglobal.com

--Edited by Valarie Jackson, valarie.jackson@spglobal.com




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