Natural gas prices have collapsed in week
2022.12.22 08:13
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Natural gas prices have collapsed in week
Budrigannews.com – As winter 2022 officially began on Wednesday, bulls in natural gas were spared the selling that had decimated the market. However, traders remained divided regarding how cold the week following Christmas would be, so it was unclear whether an uptrend would develop immediately.
The mixed weather readings that indicated that a widespread warm-up will cover most of the United States by next week following this weekend’s freeze, according to analysts, were the reason for the near 20% walloping of gas futures on the Henry Hub of the New York Mercantile Exchange since the end of the previous week.
On the hub ended the Wednesday session at $5.3320 per million metric British thermal units, up 0.6 cents. The benchmark gas contract was down 19%, or $1.27 per mmBtu, for the week.
Gas reached a nine-month low of $5.256 per mmBtu in Tuesday’s trading.
Gelber & Associates, a Houston-based energy markets consultancy, stated, “With such massive selling action that has occurred in the last few days, NYMEX gas futures prices have been over-cooked to the downside.” At this point, costs are in fact oversold as well as on a very basic level oversold and are expected for some kind of help rally, which might be currently occurring.”
Gelber’s projections suggest that natural gas may continue to experience “some wild volatility” in the coming weeks.
This is due to the fact that daily draws were anticipated to reach a peak of over 53 billion cubic feet per day on Christmas Eve before gradually decreasing for a number of days in a row to possibly 4.5 billion cubic feet per day by New Year’s Day.
The most recent weather models predict that temperatures that are slightly above average may continue into the first week of January before the next major Arctic outbreak occurs.
The European ECMWF and CFSv2 models, which were already pointing to the formation of yet another significant Polar event that would dominate a large portion of the nation during the second week of January, are among the longer-range weather forecast models and indicators that some analysts, particularly those on the long side, are looking into further.
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The current icy weather pattern may even reload in late January or early February, according to some indications.
According to Gelber, “natural gas inventories will have declined under 3,000 bcf with a storage deficit compared to the five-year average approaching 200 Bcf” by the end of the next ten days.
