Natural gas prices maintain their upward trajectory, with the February contract reaching $3.35. On the other hand, the January contract is trading at $3.6, suggesting a potential test of recent local highs from late November. This price surge is attributed to another substantial decline in US Natgas inventories, exceeding the average decrease observed over the past five years. However, forecasts for the current week indicate a potentially halved inventory drawdown compared to the previous week, implying a smaller-than-usual decline.
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile appChange in US gas inventories. Source: Bloomberg Finance LP, XTB
It is crucial to note that weather forecasts for the coming weeks predict a marked warming trend. While a slight cooling is anticipated between December 22-25, overall forecasts have shifted towards higher temperatures.
Temperatures, particularly in the Midwest region, are expected to be exceptionally high. Source: NOAA
Elevated temperatures are projected to persist into the turn of 2024 and 2025. Source: NOAA
NATGAS is holding firm at elevated levels, and excluding rolling effects, would be testing its highest levels since January 2023. Nevertheless, following two significant inventory declines, a period of reduced gas consumption is now anticipated, which should trigger a seasonal price decline. However, any shift in weather patterns could prompt a sharp reaction in gas prices. In the event of a cold snap, a range of $3.5-4.0/MMBTU becomes plausible. Conversely, a seasonal downturn should see prices decline considerably below $3.0, targeting levels between the 100 and 200-period moving averages, currently situated between $2.5 and $2.7/MMBTU.
Source: xStation5
The material on this page does not constitute as financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other particular needs.
All the information provided, including opinions, market research, mathematical results and technical analyses published on the website or transmitted to you by other means is provided for information purposes only and should in no event be interpreted as an offer of, or solicitation for, a transaction in any financial instrument, nor should the information provided be construed as advice of legal or fiscal nature.
Any investment decisions you make shall be based exclusively on your level of understanding, investment objectives, financial situation or any other particular needs. Any decision to act on information published on the website or transmitted to you by other means is entirely at your own risk. You are solely responsible for such decisions.
If you are in doubt or are not sure that you understand a particular product, instrument, service, or transaction, you should seek professional or legal advice before trading.
Investing in OTC Derivatives carries a high degree of risk, as they are leveraged based products and often small movements in the market could lead to much larger movements in the value of your investment and this could work against you or for you. Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary, seek independent advice.
