Natural gas prices moved to growth after collapse
2023.01.04 13:06
Natural gas prices moved to growth after collapse
Budrigannews.com – After five consecutive days of selling that brought the fuel’s price below key $4 support, erasing a quarter of its value, Wednesday’s 5% rebound in on the New York Mercantile Exchange’s Henry Hub threw a lifeline to those long the market. Although it is still early to tell,
Gelber & Associates, a Houston-based energy markets consultancy, stated, “NYMEX gas futures prices have slowed their capitulation, and signs of being oversold are emerging.” They added that the final arbiter for direction would be due on Thursday.
By 12:30 ET (17:30 GMT), Henry Hub’s February front-month gas was at $4.213 per mmBtu, or metric million British thermal units. This represented an increase of 22.50 cents, or 5.3%, over the previous day. Over the previous five trading days, February gas fell below the $4 per mmBtu support on Tuesday, losing almost $1.30.
America’s most popular winter heating fuel has suffered a dramatic decline, currently trading at $7 per mmBtu in December, down from $10 in August 2022.
Ironically, natural gas ended 2022 up 22% because bulls played on the mind of a market that was likely to be undersupplied during a severe winter. The storage of U.S. natural gas at the end of 2022 was little changed from the end of 2021, and the 2022/23 winter has thus far felt like an extension of autumn, albeit a little warmer. Neither of those two superlatives came to pass.
Gelber, a consulting firm, stated in its note that “the underlying supply/demand imbalance has shifted to the bearish side of the spectrum as projected daily natural gas storage withdrawals will remain bearish compared to the five-year average through at least January 12.”
As a result, “it will be a hard fight to get estimated gas storage below 2,700 billion cubic feet by mid-January.” However, “it’s not out of the question that the storage deficit compared to the five-year average could transition to a surplus in the same timeframe.”
Wholesale natural gas prices in Europe, on the other hand, fell for a second day in a row on Wednesday to their lowest level since their record highs in late February 2022, when Russia invaded Ukraine.
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.
Dutch TTF gas future for the upcoming month, the standard European gas contract, reached a record $367 per megawatt-hour in March and $364 in August. It fell below $75 on Wednesday, the lowest level since February 21, before the war, and down more than 50% from a month earlier.
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