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Natural gas up 13% as upcoming cold snap is expected to boost demand


A silo of liquid natural gas (LNG) at the LNG terminal, operated by LNG Croatia LLC, in Krk, Croatia, on Monday, January 25, 2021.

Petar Santini | Bloomberg | beautiful pictures

US natural gas contract rose more than 13% on Wednesday as temperatures dropped and forecasts showed winter weather ahead.

Contracts for February delivery rose 13.3% to $4,818 per million British thermal units, the highest level since November.

“Heating demand outlook for [the] The eastern third of the US strengthened materially for this weekend and for the final week of January,” said John Kilduff of Again Capital, noting that this Saturday could see natural gas demand record record due to the forecast of a cold explosion on Friday.

He added: “Weather has gone from not being a factor or bearish during the season to being significant for prices and demand.

After surging through much of 2021, natural gas prices fell 36% in the fourth quarter after warming temperatures and as the omicron variation made the market feel nervous.

However, contracts are up 47% for 2021 and have grown by almost 30% in 2022.

“Due to cold weather and actual worries about tighter supply, prices are moving higher in the complex,” said Campbell Faulkner, senior vice president and data analyst at OTC Global Holdings. North America.

He added: “In general, the supply of natural gas in the market is not so tight that it has become a popular trend in the past 10 years.

Jeff Kilburg, Chief Investment Officer at Sanctuary Wealth, added that some of the price increase could be attributed to traders covering positions.

“The perfect storm is hitting Nat gas futures as freezing temperatures are hitting the market as supply shortages persist and this is being amplified as many traders speculate. short-term was caught and forced to buy back their positions, exaggerating the move higher today,” he said.

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