PRICES WERE FIRM YESTERDAY… Oil stemmed the bleeding, and gas finished the quarter in good shape. It remains to be seen if gas bulls can parlay the momentum.
What We Are Watching
Our model for spot fall natural gas futures on the NYMEX runs through the November 2024, December 2024, and January 2025 contracts—the first three (of five) contracts of the winter strip—and covers September 27th through December 27th period.
As illustrated above, the model begins with last Friday’s $2.902 close in the November market. The median of potential prices returns for the quarter is $2.843, so there is a slight negative drift in prices. Despite the steep contango in the market… for instance, the January 2025 contract settled yesterday at $3.602… there is a 33% probability (odd 2:1) spot gas will expire at the end of the strip (i.e., on the December 27th expiry of the Jan-25 contract) in between $2.509 and $3.214. There is an 88% probability (odds 1:8) spot gas will finish in between $1.833 and $4.434 per MMBtu.
