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NATURAL GAS FUTURES PLUNGING AS WARM WINTERS ARE FAVORING BEARS

natural gas

Harvest Global Markets :

Natural gas prices on the New York Mercantile Exchange fell below crucial $3 support on Monday before rebounding to just above the level, indicating that the “warm winter” story appears to have taken its ultimate toll on the fuel at least for the time being.

Before trading 0.5 percent higher on the day at $3.052, the front-month March gas contract on NYMEX’s Henry Hub reached a low of $2.993 per mmBtu, or metric million British thermal units, on the intraday. Since the beginning of the year, natural gas has lost about 30% of its value due to low demand for heating due to one of the warmest winters in 20 years in the Northern Hemisphere. In August 2022, Henry Hub’s front-month contract reached a 14-year high of $10. According to analysts, weather forecasts that had been shifting from cold to warm recently were pointing to colder conditions once more across the United States, which could help gas prices continue to recover.

On January 11, Freeport LNG informed that “our restart timeline has not changed.” We still intend to restart our liquefaction facility safely in the second half of this month, subject to regulatory approvals. During the first nine months of 2022, Freeport, which was responsible for approximately 20% of the total LNG exports from the United States and generated $35 billion in revenue, served Europe well last year as the continent attempted to halt a growing energy crisis this winter. The upcoming restart comes as natural gas prices increased slightly on Monday by 10%, but only after losing over 7% last week and over 50% in the previous four weeks. As a result, the CEO of Chesapeake Energy issued a warning that the industry may need to moderate supply growth. Europe is driving a decline in natural gas demand from its peak last year. Demand is lagging, however, as European storage is full and the winter is much milder than anticipated.

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