The U.S. Natural Gas drops real down
Natural gas futures in the United States fell to their lowest level in almost two months on Tuesday, as warmer-than-expected winter forecasts drove prices soaring.
The contract for January delivery declined as much as 7% to $4.51 per million British thermal units at the time of writing (MMBtu). The loss follows a drop of 11.37 percent on Monday when the contract settled at $4.85 per MMBtu.
Futures have dropped more than 17% in the last two sessions.
“The weather projection for the winter’s heating peak months of December, January, and February present comparatively moderate than normal temperatures.” They’ll be in the key US demand areas,” said David Givens, Argus Media’s head of gas and power services for North America.
′′On the 29th of November, the first day of the prompt month, both commercial (gas distributors, producers) and non-commercial market participants (speculators, prop shops, hedge funds) are looking at fundamentals that are pushing prices down,” he added.
The selling over the last two days follows a 7 percent increase in natural gas contracts on Friday, despite oil plummeting 13% in the same session. Because the December contract expired on Friday, traders may have been closing off positions.
Natural gas prices are currently down approximately 16% for the month, on track to be the lowest since December 2018. The contract is set to drop for the second month in a row.
Natural Gas most unstable in 2021
This year, natural gas has been a turbulent market, with recent severe drops following a time of extreme strength. From April through September, the contract saw monthly gains of 34%, with prices jumping 34% in September alone.
The rally continued into early October, with the contract reaching a high of $6.466 per MMBtu, the most since February 2014. As petroleum prices rose, requests for power generators to convert from oil to natural gas fanned the confidence. The energy crisis that is affecting Europe and the United Kingdom has now driven up costs in the United States.
“For several months, the natural gas market’s volatility has been off the charts,” said John Kilduff, a partner at Again Capital. He remarked that supplies appeared to be tight over the summer, and there were concerns about a shortage heading into the winter. However, the warm fall weather allowed stockpiles to be replenished.
“Storage levels have returned to the five-year norm.” The bull argument has been shattered by the relative warmth of last week, this week, and the prediction for mid-December,” he continued.
Natural gas prices are still up over 80% for the year. It’s also on course to have its most successful year since 2005.