Natural gas advances cautiously on growing forecasts for cold By Investing.com
Commodities 27 minutes ago (Jan 24, 2023 04:02PM ET)
By Barani Krishnan
Investing.com — Growing talk that sustained cold was finally headed for the United States and the rest of the Northern Hemisphere helped natural gas prices rise a second straight day on Tuesday, although the advance was just a spurt as traders remained cautious about having ceded a third of this winter to warm temperatures.
The front-month March gas contract on NYMEX’s Henry Hub settled at $3.2580 per mmBtu, or metric million British thermal units, up 3.6 cents, or 1.1%.
That added to Monday’s 5.5% gain that signaled a potential deviation in price direction in a market that has lost about 30% of its value since 2023 began, amid tepid heating demand in one of the warmest Northern Hemisphere winters in two decades.
Prior to the tumble, Henry Hub’s front-month contract hit a 14-year high of $10 in August 2022. On Monday, it hit an intraday low of $2.993 per mmBtu, marking a low since May 2021.
“The potential for an early February freeze throughout large expanses of the U.S. lit a bit of a fuse under NYMEX front-month natural gas futures on Monday,” Gelber & Associates, a Houston-based energy markets trading consultancy, said in a note.
Now, prices were facing a “second wave of bullishness” from forecasts that the U.S.-based Global Forecast System and the European ECMWF weather model will show greater Arctic wind intrusions in much of the United States, including gas production areas in Texas, Louisiana, and the Appalachian region, the Gelber note said.
Also, unlike the late December 2022 Arctic blast that plunged deep into Texas and Louisiana and featured very little, if any, ice or snow, the looming February winter event is threatening to usher in icy precipitation along with frigid temperatures, that could potentially extend freeze-offs in oil and gas wells, depending on how much ice ultimately comes to fruition, said the consultancy.
Natural gas advances cautiously on growing forecasts for cold
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