Energy Highlight of the Week
After several years of relatively stable Natural Gas prices, trading for the December NYMEX contract went on a wild ride over its final 2 weeks of trading before closing last Wednesday. The December 2018 contract price closed at $4.715, which is the highest closing price since the Polar Vortex caused a similar price spike back in early 2014. The intra month trading for the December contract was a constant battle between the bulls and the bears, resulting in a whipsaw market where prices saw swings of such magnitude, one would have to go back to 2001 to find similar movements. For example, on November 14th there was an 18.7% increase from open to close, followed up the next day by a 13.5% drop. Natural Gas storage levels continue to trend about 20% below the 5-year average and 17% lower than last year. With weather models struggling to find agreement for the winter outlook, the volatility in the natural gas market will remain strong. The Jan, Feb, Mar 2019 future contracts are currently trading at $4.339, $4.172, and $3.805 prospectively, volatility is likely to remain until a consensus on the winter forecast is reached. Looking out past March 2019, the future market has been much more stable with prices below the $3.00 mark similar to the prices we have grown accustomed to seeing in previous years.