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NYMEX January closes down 17.8 cents at $3.464/MMBtu

http://www.chemnet.com   Dec 22,2014 Platts
The NYMEX January natural gas futures contract fell 17.8 cents to settle Friday at $3.464/MMBtu on moderate weather forecasts and gas stocks that are above year-ago levels.

"The natural gas market has dropped to new one-year lows in price as the temperature outlook for the week ahead turned warmer, even as some forecasts for the 11-15 day period trended colder," Citi Futures analyst Tim Evans said. "Weaker cash prices now seen as unlikely to strengthen in time for the January contract expiration December 29 [have] contributed to the break to the downside. The market seems likely to recover once the colder temperatures arrive, but it's clear the current mild temperatures are having the greater impact on trade."

The National Weather Service 8-14 day forecast calls for higher chances for below-average temperatures across most of the contiguous US north and east of a line stretching from Idaho to the Mississippi Gulf Coast and Florida. Strong chances for above-normal temperatures prevail south and west of a line stretching from southwest Oregon to the western tip of Texas. Other areas are likely to have about-normal temperatures.

"The cold pattern that is getting set up looks to be sporadic," said Aaron Calder, Gelber & Associates analyst. "The strong production and resulting oversupply is so strong that it will take consistent heating demand to credibly move this higher."

Thursday's gas storage report from the US Energy Information Administration showed a withdrawal of 64 Bcf, which left total stock of gas in storage at 3.295 Tcf as of December 12, compared with 3.289 Tcf for the comparable week of 2013 and 3.553 Tcf as the five-year average.

"Fuel switching can provide a floor as the extra demand helps soak [up] the new production hitting the market," Calder said. "However at $3.50[/MMBtu] there won't be enough power demand to counteract this much oversupply."

The January gas contract traded Friday in a $3.444-3.677/MMBtu range.

The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm (0000 GMT Saturday).
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