Natural gas futures jump 12% in morning trading, Jan 14

Natural Gas

From Eric Janssen: Houston — NYMEX February natural gas futures jumped in US morning trading Monday because cooler temperatures are forecast for the Eastern half of the US toward the end of January.

As of 10:20 am EST (1520 GMT), the NYMEX February natural gas contract was trading at $3.503/MMBtu, a 40.4-cent increase, trading in a range of $3.281-$3.539/MMBtu.

The 40.4-cent move would be the highest day-on-day jump for the NYMEX front-month contract since November 28, 2018.

Monday’s surge also puts the front-month contract comfortably above $3/MMBtu, which it has only hit three times since the beginning of January.

Looking along the curve, NYMEX forward prices rose across the entire 2019 strip in Monday’s trading.

The uptick in prices could be tied to forecasts of colder weather, with the most recent six- to 10-day and eight-to-14-day outlooks from the National Weather Service being for the likelihood of cooler-than-average temperatures from the Midwest to the East Coast, potentially giving US demand a boost.

S&P Global Platts Analytics projects US demand to average 105.9 Bcf/d over the next 14 days.

This uptick could mean January 2019 demand moving closer to 2018’s, as month-to-date, US demand has averaged 95.4 Bcf/d, down from 112.7 Bcf/d a year earlier, Platts Analytics data shows.

Though US demand has been lower on the year, LNG feedgas volumes have nearly doubled, with Platts Analytics putting LNGfeedgas at 4.8 Bcf/d month-to-date, up from 2.5 Bcf/d a year earlier.

High production in the US has continued through the month, with Platts Analytics data showing the US dry production has averaged 85 Bcf/d through January to date, a 12.7% increase year on year.

The United States Natural Gas Fund L.P. (UNG) was trading at $28.90 per share on Monday morning, up $2.81 (+10.77%). Year-to-date, UNG has gained 23.93%, versus a -3.17% rise in the benchmark S&P 500 index during the same period.

UNG currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #52 of 108 ETFs in the Commodity ETFs category.

This article is brought to you courtesy of S&P Global.