Natural gas Prices Fell below $4
2023.01.03 14:01
Natural gas Prices Fell below $4
Budrigannews.com – Even though it is the new year, the gas bull just can’t seem to catch a break. After an already mixed winter in 2022/23, a warmer January is predicted for the United States.
On Tuesday, the Henry Hub of the New York Mercantile Exchange continued their descent into the abyss of low prices by breaching the crucial support level of $4 per mmBtu, or metric million British thermal units. This level was broken on the first trading day of 2023, which saw 11% of the market disappear.
The jaw-dropping fall has lowered “natty,” as it is known in the industry, by 40% from its peak in December, when it was above $7, and by 60% from its peak in August, when it was above $10.
In a note on natural gas, energy markets consultancy Gelber & Associates, which is based in Houston, stated that “NYMEX front-month natural gas futures are kicking off the New Year in notably bearish territory.”
The major weather forecast models, including the (U.S.) Global Forecast System (GFS) and the European (system) (ECMWF), suggest that the Polar-chilled jet stream will be stubbornly footed in place through at least mid-January and will crater demand after the bitterly cold late December winter event.
Ironically, Natty ended 2022 up 22% because bulls played on the psyche of a market that was undersupplied during a severe winter. U.S. natural gas ended 2022 little changed from 2021 closing levels, and the 2022/23 winter has mostly felt like an extension of autumn, albeit a little warmer. Neither of those two superlatives came to pass.
Wholesale natural gas prices in Europe also dropped on Monday to their lowest level since reaching record highs following Russia’s invasion of Ukraine at the end of February 2022.
Because of the mild winter, countries in the European Union were able to use less gas from reserves that had been built up in anticipation of cuts in supplies from Russia, the E.U.’s primary supplier prior to the war.
The benchmark European gas contract — gas fates for the approaching month — took off to a record $367 each megawatt-hour in Spring and was basically as high as $364 in August. It reached $77 on Monday, the lowest level since before the war on February 21 and 50% lower than a month earlier.
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