Why are natural gas prices continuing to plummet?

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February 4, 2019 1:38pm NYSE:UNG

NYSE:UNG | News, Ratings, and Charts

From Jude Clemente:

The U.S. natural gas market ignored the Polar Vortex 2019 last week and prices have plummeted

This is especially incredible since on Wednesday, total U.S. gas demand easily hit an all-time record of 150 Bcf/d, half of which was for heating.

The previous total demand record was January 1, 2018, when we devoured 143 Bcf/d but the market was spared because it was a holiday (i.e., less industrial facilities were in operation).

Up until this past week, U.S. gas demand this January was averaging about 110 Bcf/d.

Although hub pricing spiked to winter highs in some areas such as Chicago Citygate, where the city saw its 2nd coldest day in history, prompt month for NYMEX futures settled Friday at its lowest price since July 23.

Even though we have recently seen the coldest weather of the winter (Arctic Blast and Polar Vortex 2019), gas prices have collapsed 25% over the past 14 trading days. Interestingly, this is in stark contrast to oil prices, which were up nearly 20% and had their best January on record.

Overall, gas prices this winter 2018-2019 have been highly volatile, with daily expirations ranging from $4.84 per MMBtu back in mid-November to $2.73 on Friday. Last winter, gas prices from November 1 to February 1 were in a tighter range of $2.60 to $3.63.

The United States Natural Gas Fund L.P. (UNG) was trading at $23.79 per share on Monday afternoon, down $0.64 (-2.62%). Year-to-date, UNG has gained 2.02%, versus a 1.97% 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 Forbes.

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