Happy Friday
The EIA reported that for the week ending December 27th, -116 Bcf of gas came out of storage in the lower 48, less than the expected -122 to -126 consensus. Second miss in two weeks.
Unsurprisingly, the market sold off. The NYMEX February front month contract sold off to $3.34 US/mm, down 8%. More importantly, the February contract is back to where it started last week before that big up move on Friday.
The Summer strip traded down 12 cents to $3.32, same level as last Friday’s close.
We retraced that huge spike on Monday, which means that if this was a short squeeze (a lot of traders were short this market and got panicked out of their position), then the market ought to drift down to a new level of price discovery. If this was more indicative of a new outlook (maybe winter will be colder than expected or production will not rise to meet demand), then we have discovered the new price level and we may drift up from here.
Perhaps this cold snap will not be as bad as people thought last Monday, but still be ready to bundle up in the coming days.