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January 2018 gas futures turn negative overnight

After ending the week's opening session up 13.3 cents at $2.745/MMBtu, NYMEX January 2018 natural gas futures turned negative overnight ahead of the Tuesday, Dec. 19, open, as the market considers the impact of extended cold weather on demand and the rate of weekly storage draws. At 7:01 a.m. ET, the contract was 3.1 cents lower at $2.714/MMBtu, while reaching an overnight high at $2.765/MMBtu.

The onslaught of cold weather drove a 50% week-on-week surge in residential/commercial-sector demand and contributed to a 27% gain in total U.S. gas consumption during the week ended Dec. 13, according to the U.S. Energy Information Administration's most recent "Natural Gas Weekly Update."

The latest six- to 10-day and eight- to 14-day projections from the National Weather Service call for ongoing weather-driven demand support, reflecting below-average temperatures over nearly the entire country. Average to above-average temperatures are called only for few parts of the East Coast and Southwest through both periods.

Weather as forecast should keep natural gas demand for heating elevated in the coming weeks and help ramp up the pace of storage erosion, following the recent reprise of weekly storage draws that nonetheless continued to trail historical averages.

For the week ended Dec. 8, the EIA detailed a 69-Bcf draw that exceeded consensus estimates, but was below both the 132-Bcf year-ago drawdown and the 78-Bcf five-year average withdrawal. It took total working gas stocks to 3,626 Bcf, or 201 Bcf below the year-ago level and 27 Bcf below the five-year average of 3,653 Bcf.

Greater amounts of natural gas are expected to be pulled from underground storage amid rising natural gas demand for heating due to colder weather in store, which should shrink inventories and potentially expand storage deficits to historical averages.

In cash activity, the price of day-ahead natural gas favored the upside in much of the country Monday, in line with rising futures.

Looking at the key delivery locations, roughly 11-cent gains on average took Chicago and benchmark Henry Hub spot gas prices to indexes at $2.668/MMBtu and $2.705/MMBtu, respectively, as an almost 7-cent advance steered PG&E Gate next-day gas pricing to an index at $2.911/MMBtu. A near 34-cent decline in defiance of the broad uptrend drove Transco Zone 6 NY hub action to an index at $2.851/MMBtu.

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Regionally, Midwest cash gas price activity added 12 cents on the session to average at $2.557/MMBtu, as Gulf Coast day-ahead gas pricing logged a near 10-cent increase in deals averaging at $2.656/MMBtu. West Coast next-day gas prices rose by about 16 cents on average to an index at $2.610/MMBtu, as Northeast spot gas price action deflated by roughly 26 cents against the wider uptick to an index at $3.107/MMBtu.

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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.