The NYMEX January natural gas futures contract rebounded Monday from Friday's selloff to settle at $2.235/MMBtu, up 2.3 cents.
The January contract dropped 8.7 cents Friday to settle at $2.212/MMBtu on the contract's first day in the prompt-month position, shrinking its premium to the December settlement price to a little more than half a cent.
"The natural gas market is still attempting to stabilize after last week's price decline, but is struggling against warmer-than-normal temperatures in the outlook for the next two weeks," Citi Futures energy futures specialist said Tim Evans in an email.
The National Weather Service's six- to 10-day outlook, released Sunday afternoon, called for above-average temperatures to spread across nearly the entire continental US. Portions of Texas, New Mexico and Louisiana are expected to see near-average temperatures.
The weather service's eight- to 14-day forecast showed above-average temperatures spreading across the continental US. The highest likelihood for unseasonable warmth in both forecasts was concentrated across the Northeast and Upper Midwest.
"If December temperatures play out as forecasted, the market wouldn't see a larger-than-average withdrawal until January," Aaron Calder, an analyst with Gelber & Associates, said in an email.
Calder added: "That is the wrong prescription for a market that just set a record for overall storage and just missed out on a month of the traditional withdrawal season."
"The market priced in a very warm winter and that's putting downward pressure on prices. We still have a lot of winter ahead of us and it's hard to break the market too much before we even reach December," said Price Futures Group senior market analyst Phil Flynn.
Flynn also said the January contract could be seeing some price support Monday as "there is some talk we could get our first storage withdrawal of the season."
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
