Gas prices stable during cold weather
2022.12.17 01:44
Gas prices stable during cold weather
Budrigannews.com – After erratic gyrations that left traders with few clues as to the direction the market would take in the near future, the rodeo in U.S. natural gas came to an abrupt end on Friday, with a drop of 5% on the day and a rise of a little more than that on the week.
on the New York Commercial Trade settled Friday’s exchange down 37 pennies, or 5.3%, at $6.60 per million metric English warm units. The benchmark gas contract was up 5.7% for the week. The week’s low was $6.25, and the week’s high was $7.10.
According to a note from gas trading consultancy Gelber & Associates, “From all accounts, the NYMEX gas futures market should be muscling higher. However, because several large hedge funds are positioned in largely short positions, they continue to defend those positions by slapping prices down every time they exceed the $7.00/MMBtu area.”
“It is evident that two distinct camps are engaged in a significant conflict here. Although NYMEX gas futures will not be able to successfully climb into the $7.20s/MMBtu area and elicit a significant short squeeze, more significant up-and-down price action can be anticipated.
After the U.S. Energy Information Administration reported in its weekly report that local utilities pulled 50 billion cubic feet, or bcf, from for the week ending on December 9, gas prices became more volatile on Thursday. Even though it was reported that heating demand was lower than usual for this time of year, that was more than double the 21-bcf draw from the week before.
During the week that ended on December 9, analysts tracked by Investing.com had anticipated removing 45 bcf from storage.
According to Refinitiv, a data provider associated with Reuters, there were approximately 137 actual heating degree days (HDDs) for the week, which was lower than the 30-year average of 160 HDDs for the time period.
The number of degrees a day when the average temperature falls below 65 degrees Fahrenheit (or 18 degrees Celsius) is measured by HDDs, which are used to estimate demand for heating homes and businesses.
Commenting on the EIA report, NatGasWeather stated, “It was warmer than normal over the majority of the U.S., excluding the cold Northern Plains, Northwest, and Northern Rockies.”
A revision to weather reading models on Wednesday also led to the collapse of a five-day gas rally. Prior to that, the European model ECMWF and the US Global Forecast System (GFS) had consistently demonstrated the possibility of a near-record cold spell lasting until the end of 2022.
However, forecasters warn that a polar vortex, also known as an Arctic winter blast, could make this December the coldest since 2010. As a matter of fact, the most recent polar vortex occurred in 2014. Weather records indicate that similar cold outbreaks occurred prior to that, with notable freezes occurring in 1977, 1982, 1985, and 1989 among them.
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Friday’s Gelber note stated, “On the weather front, it’s about as bullish as it can get.” In addition to the current Arctic intrusion, the models have been predicting more favorable weather over the course of the last few days. Following the current major cold outbreak, it does not appear that the central and eastern parts of the United States will experience a significant increase in temperature.
According to the consultancy, the gas storage report for the week ending December 16 might show a drawdown of 75 to 95 bcf.
It went on to say that, “With the incoming winter blast, it wouldn’t be out of the question that over the next three weeks, there may well over 500 bcf of storage gas withdrawn.”
