The NYMEX December natural gas futures contract, in its final day of trading Monday, jumped 14.7 cents to settle at $3.232/MMBtu as increasingly supportive weather forecasts bolstered the market.
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The December contract has rallied over the last seven trading sessions, rising 52.9 cents since November 17 to expire Monday at the highest prompt-month expiration price since the December 2014 contract expired at $4.282/MMBtu.
Analysts at Tudor Pickering Holt in a market note Monday said that the weather/forecasts are "looking normalish" over the next three weeks, which could help to start the process of "pulling down storage overhang."
In addition, despite a slow start to winter demand, the possibility still exists for gas prices "to see $3.75[/MMBtu] Q1 prices" if cold weather patterns persist, the analysts said.
The latest six- to 10-day and eight- to 14-day outlooks from the US National Weather Service called for below-average temperatures across the western one-third of the country. Near-normal temperatures were forecast across much of the Northeast, which was a bullish departure from forecasts prior to the Thanksgiving holiday in the US. Above-average temperatures were expected to remain across the Upper Midwest and the Southeast.
Over the next seven days, US demand is expected to total around 79.6 Bcf/d, up more than 4 Bcf from the prior week, Platts Analytics' Bentek Energy data showed. Looking further out, demand in the eight- to 14-day range is expected to rise even higher, reaching an estimated 92.9 Bcf/d.
Meantime, US gas production is expected to hold flat over the next two weeks, reaching an estimated 71.6 Bcf/d, according to Bentek data.
Further out on the curve, the January contract rose 11.8 cents to settle at $3.32/MMBtu the day before trading as the prompt-month contract starts.
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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