A liquefied natural gas (LNG) storage silo at the LNG Terminal operated by LNG Croatia LLC in Kurk, Croatia, on Monday, January 25, 2021.
Petal Santini | Bloomberg | Getty Images
US natural gas futures Tuesday fell to its lowest level in almost three months as winter forecasts, which were warmer than expected, dropped prices.
January delivery contracts fell by as much as 7%, trading at $ 4.51 per million British thermal units (MMBtu), the last price seen on September 1. Per MMBtu.
Futures have fallen by more than 17% in the last two sessions.
David Givens, Head of Gas and Power Services in North America at Argus Media, said:
“This is a purely weather recession …[forecasts] It indicates that the average temperature in the entire United States is currently above the average temperature. This has reduced the expected number of heating days that will have a significant impact on Henry Hub’s price, “added Campbell Forkner, Senior Vice President and Chief Data Analyst at OTC Global Holdings.
Selling over the last two days is after a 7% surge in natural gas futures on Friday, despite a 13% decline in oil during the same session. Since the December contract expired on Friday, it is possible that some activity was for traders to close their positions.
Natural gas has fallen by about 16% this month and is on track for the worst month since December 2018. Contracts are on track for a decline in the second month.
Natural gas has been a volatile trade this year, and the recent sharp decline continues in a very strong period. Contracts recorded a monthly rise from April to September, with prices soaring 34% in September alone.
Strength continued until early October, with contracts reaching $ 6.466 per MMBtu, the highest level since February 2014. With soaring crude oil prices, there have been calls from electricity producers to switch from oil to natural gas, increasing optimism. The energy crisis that is unfolding across Europe and the United Kingdom has also pushed up US prices.
John Kirduff, a partner at Again Capital, said: He said supply appeared to be tight during the summer and could lead to supply shortages during the colder months. However, the moderate drop temperature allowed us to replenish our inventory.
“Currently, storage levels are in line with the five-year average. Last week, this week, and mid-December forecasts, relative warmth destroyed the bullish case,” he added.
Throughout the year, natural gas is still increasing by about 80%. We are also on track for the best year since 2005.
Forkner of OTC Global Holdings added that price sensitivity to temperature forecasts is the highest in 10 years, as “natural gas burns have increased and related gas production has declined in the 48 mainland US states.”
“All these events have created a bearish predicament for natural gas within the expected volatility, which now includes 12% of daily movements,” he said.
U.S. natural gas sinks and goes well towards the worst month in three years
Source link U.S. natural gas sinks and goes well towards the worst month in three years