Harvest Global Markets :

On Monday, those who were long the market attempted to make up for three weeks of losses that had seen prices fall more than 50% since November’s close, causing natural gas prices to rise by more than 5%. When trading for the second week of January began on the Henry Hub of the New York Mercantile Exchange, gas futures saw initial increases of up to 11%. But as the day went on, the market lost a lot of its upward momentum, and the settlement only got about half of the price peak of the session.

Friday, the benchmark February gas contract from Henry Hub closed at $3.91 per metric million British thermal units (mmBtu), an increase of 20 cents, or 5.4%. February gas reached a high of $4.123 per mmBtu earlier in the day. It was a small gain for a contract that had fallen 35% in two weeks and lost 76.50 cents, or 17.1%, last week. Natural gas futures suddenly collapsed from December onwards after explosive upward price action for the majority of 2022 from weather extremes and a supply squeeze caused by political and other disruptions to Russian gas output following the invasion of Ukraine. Since last month, the unseasonably warm winter temperatures that left both the European and American heating markets sufficiently supplied the market.

While forecasts predict exceptionally mild temperatures across the United States until at least January 12, weather readings point to the possibility of additional downside price action in gas. Despite this, some analysts still have a moderately positive outlook for gas over the next two weeks. Over the past two weeks, gas storage data from the United States Energy Information Administration (EIA) showed withdrawals of more than 200 billion cubic feet (bcf). Market expectations for draws have been skewed even higher recently as a result of the unusually warm start to the winter of 2022/23, which would normally be considered bullish.

When Powell speaks today at a bank symposium in Sweden at 1900 HRS PKT, he is expected to provide additional insight into the trajectory of U.S. monetary policy and economic expansion. Traders have been pricing in a greater likelihood of the Fed initiating fewer rate hikes in the upcoming months, which is anticipated to largely benefit crude prices. However, worries about the U.S. economy slowing down have dampened optimism for crude markets. This week, important U.S. consumer price index inflation data at 1830 HRS PKT on January 12, 2023, are also the focus, as they are likely to impact monetary policy.