The NYMEX February natural gas futures contract continued its surge Friday, as the February contract expired at $3.505/MMBtu, up 5.8 cents compared with Thursday's close.
Friday's price jump caps a week that saw the February contract spike 32 cents over the past five trading sessions.
Friday is the final day with February as the front-month contract. March will take over as the prompt-month contract Monday. NYMEX March gas settled Friday at $3.175/MMBtu, up 7.6 cents.
John Woods, president of JJ Woods Associates, said the market is "overdone on the top side," adding that "going into the tail end of winter, prices are going to fall."
Cooler weather appears to be on the horizon, with the most recent eight- to 14-day outlook from the National Weather Service calling for a likelihood of lower-than-average temperatures across much of the Midcontinent and parts of the Northeast, likely driving up demand as the market moves to February.
S&P Global Platts Analytics projects US demand to average 94.8 Bcf/d over the next eight to 14 days, a jump from the 84.1 Bcf expected Friday.
Despite cooler weather spurring demand, Woods said the forecast "has already been built in [to prices]."
Possibly adding support to prices are well-below-average storage stocks. Energy Information Administration data show US stocks at an estimated 2.296 Tcf, a 17.5% deficit to the five-year average.
In the face of increasing demand, US dry production is expected to remain steady, averaging 77.3 Bcf/d over the next 14 days, according to S&P Global Platts Analytics.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (2400 GMT).
