After climbing nearly 35 cents on reduced trading volume Friday, traders added another dime to the February natural gas futures rally on Monday as winter storms and freezing temperatures were expected to engulf the eastern United States later in the week. The front-month contract ventured back above $6 to close at $6.072, a gain of 10.1 cents.
While the current rebound in value might have bulls revving their engines, some market experts still argue that the recent price fluctuations only have to do with the changing short-term weather outlooks and that the market remains fundamentally rudderless.
“The natural gas market is also sorting out its overall market direction, with the day-to-day changes in the temperature outlook being mirrored in the day-to-day price changes,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “What we see missing here is any sense of the larger fundamental landscape, with enough cold to produce storage withdrawals that will beat the five-year average. This is admittedly a low bar given the warmer-than-normal Januarys of the past five years, but we see the declining storage surplus, and the likely emergence of a year-on-five-year average storage deficit that may follow, as gradually building the upward pressure on prices.”
The recent surge in prices is likely tied to the wintry forecast for later this week.
“Storm energy from the southwest and the northwest will converge over eastern North America by the middle of the week to give rise to a complex winter storm,” said Jim Andrews, a senior meteorologist with AccuWeather.com. “Substantial snowfall as well as significant icing will be primary storm impacts over the Northeast to the Great Lakes. The warmer side of the storm will foster soaking rain and even an outbreak of strong thunderstorms.”
According to the National Weather Service’s (NWS) latest six- to 10-day forecast, below-normal temperatures are expected east of a line from central Louisiana through eastern Wisconsin for Jan. 11-15. The Southwest and north-central part of the country is expected to exhibit above-normal readings while the rest of the regions will see normal winter temperatures for the time of year.
The bulls’ run might be short-lived, though, as the East is expected to warm up in the NWS’ eight- to 14-day forecast. Only the Northeast and the tip of the Florida peninsula are expected to see below-normal temps, while the rest of the country experiences normal and above-normal conditions.
©Copyright 2009Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |