Houston — The NYMEX December natural gas futures contract continued to rally on Monday as traders reacted to colder weather encompassing much of the northern tier of the nation.
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The December contract settled at $2.95/MMBtu, up 10.7 cents from Friday's close.
"This rally isn't what I would call bullish, but the market is certainly less bearish than a few weeks ago," Kyle Cooper of ION Energy Group said. "If we have even normal temperatures this winter, I think gas supplies will be at a premium during 2017."
Monday's price gains coincided with a revised long-term National Weather Service forecast that now calls for below-average temperatures into next week for major gas-consuming regions of the Mid-Atlantic, Great Lakes and Southeast.
According to the weather service, strong northwesterly winds on the backside of a low-pressure system brought heavy lake-effect snow Monday from Michigan to upstate New York.
The colder weather is a relief to gas pipeline and storage operators as the storage stocks reached a record 4.047 Tcf for the week ended November 11, according to the US Energy Information Administration.
Demand forecasts are providing support for Monday's pricing gains.
According to Platts Analytics' Bentek Energy, total US demand is expected to climb to 83.2 Bcf Monday and average about 82 Bcf for Thanksgiving week. Dry gas supplies for the Lower 48 states were expected at 71.8 Bcf Monday and remain close to that level for the week ahead.
The National Hurricane Center said that Tropical Storm Otto had formed in the southwestern Caribbean Sea. With sustained winds of 50 mph, the storm is expected to drift westward toward the coasts of Costa Rica and Nicaragua.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (0000 GMT Tuesday).
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