Natural gas prices and related ETFs continued to heat up on projects that the cold weather conditions could linger into February.
“While prices sold off sharply Wednesday, we continue to view weather sentiment as at least moderately bullish, aided by the overnight European weather model adding some HDDs back compared to Wednesday’s data,” NatGasWeather said, according to Natural Gas Intelligence.
Bespoke Weather Services also said that based on the latest guidance it expects cold risks rising into early February, pointing to models showing a “significant” negative Eastern Pacific Oscillation and a “growing” negative North Atlantic Oscillation that could “deliver a sustained cold shot to end January that rivals what we see over the weekend. This remains likely to linger at least through Week 3 as we see solid staying power with any stronger air.”
Analyzing Natural Gas Prices
Nevertheless, natural gas prices still pulled back from earlier highs in the morning after the U.S. Energy Information administration revealed domestic supplies of natural gas dipped by 81 billion cubic feet for the week ended January 11, compared to estimates of 70bc to 80bcf and the five-year average of 218 billion for the period.
Total natural gas inventories stood at 2.533 trillion cubic feet, or down 77 billion cubic feet year-over-year, and 327 billion below its five-year average.
“It was warmer than normal over almost the entire country” during this week’s storage report period, “especially so across the Midwest and central U.S.,” NatGasWeather said.
With supply hovering below historical averages, traders are looking more closely to the demand side, especially to weather forecasts ahead that point to any signs of cold weather heating demand.
For more information on the natgas market, visit our natural gas category.
The United States Natural Gas Fund L.P. (UNG) was trading at $27.83 per share on Friday afternoon, down $0.44 (-1.56%). Year-to-date, UNG has gained 19.34%, versus a 0.35% rise in the benchmark S&P 500 index during the same period.
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