New weather forecasts show thaw in US in late January and early February
NATGAS retreats 6% at the beginning of the week following a weekend winter comeback. This week temperatures will remain low, but towards the end of January and February, there is expected to be a significant thaw in the USA. What is the current situation?
The gas market was additionally motivated for greater volatility due to the tense situation in the Middle East. Some gas carriers had to change their route to Europe, although this does not cause a major problem in the near future. The level of reserves fell below 80% capacity with a 5-year average at 68% for this period. It is expected that at the end of the heating season, the level of storage filling will remain above 50%, which does not give much perspective for growth in the futures market, but of course, large changes can be expected in the spot market in case of further winter attacks.
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Open account Try demo Download mobile app Download mobile appIn the United States, just before the weekend, we observed a price increase to 3.3 USD, which, with the maintenance of low temperatures, gave the perspective to rise even to the range of 4-5 USD/MMBTU. On Friday, the price finally increased by 7%, but the spot price rose by 300% to 13 USD/MMBTU. Nevertheless, today we are observing a 6% decrease in the futures price, after the appearance of new forecasts for the turn of January and February. A significant thaw is expected, which can significantly reduce gas withdrawals from storage.
Is there still hope for the bulls? As in previous years, there may be problems with infrastructure in Texas, which is not prepared for extreme frosts. However, a change in weather perspectives would have to occur.
The 6-10 perspective still indicates lower temperatures in the east, but these are not to be very low temperatures compared to the standard. The Midwest is most significant for reserves. Source: NOAA
The price scored a big drop at the beginning of the week, wiping out almost all of Friday's increase. Gas is holding above $3.1/MMBTU at the 61.8 retracement. If this support breaks, gas could then score a correction to 2.94 at the 50.0 retracement level. Holding this support, in turn, will give a chance to test $3.3/MMBTU again before rolling over. Source: xStation5
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