After rising 11.5 cents in the Nov. 27 session, NYMEX December natural gas futures rallied Tuesday, Nov. 28, on short covering and fresh buying ahead of the contract's afternoon expiration.
Trading from $2.945/MMBtu to $3.102/MMBtu, the December gas futures contract settled and expired above $3.00/MMBtu at $3.074/MMBtu, climbing another 14.6 cents. January 2018 natural gas futures ended the day at $3.128/MMBtu, up 11.1 cents.
"The natural gas market is seeing a further round of buying ahead of today's December contract expiration, supported by a somewhat cooler 11-15 day temperature forecast," according to an early Nov. 28 note from Citi Futures analyst Tim Evans.
The National Weather Service's six- to 10-day forecast is calling for above-normal temperatures for much of the East and the Midwest, as well as areas of California. Normal to below-normal temperatures are projected for the Rockies, Texas, portions of the central U.S. and the West Coast.
In the weather service's eight- to 14-day outlook, normal to above-average conditions are expected along the West Coast, in the Rockies and areas of the central U.S. and the extreme Northeast. Below-average temperatures are projected by the agency for the rest of the country through the period.
Increasingly colder weather is on the horizon as the calendar officially turns to winter shortly, which should lead to larger gas storage withdrawals in the weeks ahead, a factor that is also buoying natural gas futures prices.
Outlooks from market analysts and traders for the upcoming natural gas storage report that will cover the week ended Nov. 24 are presently calling for an average pull in the low 40s Bcf. The latest figure will compare to a 43-Bcf year-ago pull and the 47-Bcf five-year average withdrawal.
For the week ended Nov. 17, the U.S. Energy Information Administration reported a net 46 Bcf was pulled from storage, leaving total U.S. working gas at 3,726 Bcf, or 319 Bcf below the year-ago level and 121 Bcf below the five-year average of 3,847 Bcf.
In line with the continued strength in the futures arena, day-ahead natural gas prices generally advanced Tuesday. Gains were pegged at 10 cents to 20 cents on average at the major hubs.
In the Northeast, spot gas value at Transco Zone 6 NY was up about 20 cents to an index near $2.95/MMBtu. To the south, next-day natural gas at Tetco-M3 was eyed at $2.60/MMBtu, also increasing about 20 cents on the session.
Product for Wednesday flow at the benchmark Henry Hub market in the producing region saw an index at about $2.90/MMBtu, increasing several cents on the day.
Spot natural gas at the Chicago hub posted an average near $2.85/MMBtu, tacking on 15 cents, while product at Demarc notched an index around $2.75/MMBtu, also rising about 15 cents.
Along the West Coast, PG&E Gate gas was up about 10 cents to an index atop $3.10/MMBtu. Conversely, SoCal Border natural gas deals for Wednesday flow lost a few cents in value to an average above $2.70/MMBtu.
Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities Pages.