Storage Surplus Cushions Natural Gas Prices Despite Biting Cold
London: 16 January 2024 (TraderMade): After experiencing a notable 14.5% increase the previous week, US natural gas took a downturn, witnessing a 4% decline on Monday.
NATGAS declined by 3.57% to $2.5575/MMBtu as of 08:05 AM GMT.
US Natural Gas: Key Points
- Price Dip: After last week's 14.5% jump, US natural gas fell 4% on Monday, settling at $2.5575/MMBtu.
- Weather Watch: A brutal Arctic cold front grips North America, bringing record-low temperatures to Chicago (-10F) and Oklahoma City (0F) with wind chills as low as -30F in the Rockies.
- Disruption Concerns: The cold front raises concerns about disruptions to energy operations like snowstorms, rain, and frozen infrastructure impacting gas production.
- Storage Buffer: However, gas storage is 11.6% above the seasonal average, offering some cushion.
- Warmer Outlook: Meteorologists predict warmer temperatures in the US (Jan 22-26), potentially stabilizing the market.
The fluctuation is attributed to gas traders closely monitoring evolving weather and demand forecasts amid the intrusion of a harsh Arctic cold front across North America.
Weather Conditions
The impending weather conditions forecast record-breaking low temperatures, with projections indicating the potential for Chicago to plummet below -10F (-23C) and Oklahoma City to dip below 0F (-17.7C). The Rockies region is also expected to face particularly challenging wind chills, potentially reaching as low as -30F (-34.4C).
This extreme cold front raises concerns about potential disruptions in energy operations due to adverse weather conditions, including snowstorms, sleet, and rain. Furthermore, frozen infrastructure could pose challenges to gas production during this period.
Natural Gas Storage
Despite these challenges, there is a silver lining. Natural gas in storage presently exceeds the seasonal average by a noteworthy 11.6%.
Additionally, meteorologists offer hope by forecasting warmer temperatures in the US for the period spanning Jan. 22-26, which may contribute to stabilizing the natural gas market.
