Commodity Market Report
North America gas markets short-term outlook December 2019: The big short
Report summary
A big short has been placed on low Henry Hub gas prices. The market is already assuming that this winter is over. Even a polar vortex close out would still not put at risks end of season US working gas storage stock out. But what if US gas production is showing signs of finally bending over. Although it is true that production is at much higher levels than in the past, so too are demand and exports. With a little bit of persistently colder weather outsized storage withdrawals could occur in January and February. Better yet declining production levels from capital discipline being exercised from financially distressed producers that were not given the opportunity this winter to hedge at higher prices may result in higher prices ahead. Will low prices be the cure of low prices?
Table of contents
- Is winter already over? After a cold November, December weather has been milder than normal with a very warm end to 2019 currently forecasted over the holiday season. However, we are reminded that January and February are the coldest months of winter and can yield outsized storage withdrawals. Better yet, some early signs that US gas production is finally bending over give hope for Henry Hub gas prices to recover.
- Permian and Northeast basis remains resilient despite production growth?
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