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January 2018 natural gas futures tumble 15 cents to near 10-month low

After rising 5.6 cents in the Dec. 11 session, NYMEX January 2018 natural gas futures sank to a near 10-month low Tuesday, Dec. 12, as the market sold off on mixed weather expectations and bearish storage prospects.

Trading a range from $2.673/MMBtu to $2.844/MMBtu on the day, the front-month January 2018 natural gas futures contract closed at $2.678/MMBtu, down 15 cents to its lowest settlement since February.

While seasonable to colder-than-normal temperatures are anticipated for parts of the East and the northern U.S., which should provide for elevated natural gas heating demand in the coming weeks, warmer conditions elsewhere in the country could keep a lid on weather-related demand in those areas.

According to the National Weather Service, above-average temperatures are expected across much of the country in the six- to 10-day period, with average to below-average temperatures eyed for the Northeast, the mid-Atlantic and areas of the Upper Midwest.

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In the agency's eight- to 14-day outlook, normal to below-normal temperatures are likely to expand across the entire northern tier of the U.S., with above-normal conditions expected for the southern-tier of the country.

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On the supply side, market analysts and traders are looking for a below-average pull from natural gas storage for the week ended Dec. 8. Estimates for the next storage report to be released Dec. 14 by the U.S. Energy Information Administration span a pull in the high 40s Bcf to the low 70s Bcf, which would compare to the 132-Bcf year-ago pull and the 78-Bcf five-year average withdrawal.

For the week ended Dec. 1, the EIA reported a surprise 2-Bcf injection into storage, which marked the first net addition into storage during the month of December since 2012. The figure came in well above the 69-Bcf five-year average withdrawal and a 43-Bcf pull in the corresponding week in 2016. Total working gas stocks currently sit at 3,695 Bcf, or 264 Bcf below the year-ago level and 36 Bcf below the five-year average of 3,731 Bcf.

Spot natural gas markets at the major consuming hubs ran mixed Tuesday, tracking the recent volatility in futures.

Values at the Northeastern hubs rallied in many cases by several dollars on cold weather, increased demand and pipeline constraints. At the Algonquin Citygates, spot gas was priced at an index near $10.00/MMBtu, soaring $3 to $4 on the session. To the south, spot gas at Tetco M3 notched an index around $4.65/MMBtu, climbing $1 to $2 on the day.

Gas for Wednesday flow at the Henry Hub market in Louisiana came in at $2.80/MWh, up 1 cent or so on the session.

On the West Coast, PG&E Gate spot gas near $3.00/MMBtu, also increasing about 1 cent.

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 and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.