Nat Gas News – January 24, 2017

Forbes reports: Natural gas prices averaged a little more than $2.50 per mmbtu (million British Thermal Units) in 2016. Those days are over. Prices willaverage at least $3.50 to $4.00 in 2017. Prices have more than doubled since March 2016 but gas is still under-valued. Supply is tight because demand and exports have grown and shale gas production has declined. In April of last year, I wrote that natural gas prices should double and they did. Henry Hub spot prices increased 2 1/2 times from $1.49 to $3.70 per mmbtu and NYMEX futures prices doubled from $1.64 to $3.30 per mmbtu. Nevertheless, gas prices are still too low. Storage was at record high levels throughout 2016 reaching 4.1 Bcf (billion cubic feet) and 84% of working capacity in mid-December. Storage has fallen 1.1 Bcf in the last month to 61% of capacity. That is below the 5-year average. For more visit forbes.com or click http://bit.ly/2kb12Zg

Economic Calendar reports: Natural gas prices rebounded today, with the contract for February settlement on the New York Mercantile Exchange closing today’s pit session $0.04 higher, up 1.3%, at $3.25/MMBtu. Upcoming cold weather appears to be behind today’s advance, as well as the contract’s current oversold condition. According to natgasweather.com, a colder system will sweep across the central and eastern US late this week, ending the current mild spell as natural gas demand surges to near or slightly stronger than normal levels due to much of the US finally dropping below freezing besides the far southern US. Despite today’s bounce, however, the overall bias in natural gas remains to the downside, as open interest was not supportive during the rally from the January low. Thus, the move is vulnerable to a complete retracement as it appears to have been driven largely by shortcovering. For more on this story visit economiccalendar.com.