The NYMEX 12-month strip rose $0.45/dth on the week, the second week in a row of weekly gains. The increase seems mostly related to start of winter season-type impacts. On the supply side, we saw the season’s first withdrawal, which coupled with a larger than normal pull forecasted next week, helped drive the market up. Also adding to uncertainty on the supply side is the ongoing unknowns related to a potential U.S. rail strike in December, an issue that could influence coal availability and therefore, as an alternative source, natural gas demand. Perhaps a stronger impact was seen on the demand side as the mild start to November has given way to more normal cool late fall temperatures. A slightly colder than normal December in the Northern one-third of the U.S. is looking more likely than was forecast a few weeks ago. Temperatures are turning colder in Europe and parts of Asia, as well as recent LNG demand reached a five-month high of 12.2 Bcf/day. The market is also nervous about recent comments by Russia threatening further natural gas supply cuts to Europe, making the region more dependent on other sources like the U.S.
The market may have some strength to the upside as it reacts to the expiration of the December contract on Monday and the entering to the start of the heart of the December – February heating season. |
