I have been perplexed at the reasoning of the drop of nat gas prices as of late. We are entering a period of weather that has not been seen in 20+ years in the consuming region. A week or two of normal or above normal temps will not make up 15 to 40 degrees below normal with strong winds. Our inventory levels will be below 1 trillion cubic feet by april which has only occurred a couple of times in the past ten years if we just have normal temperatures for the rest of the year. If you compare the temps for next week to the week we had a withdrawal of -295, their is no comparison. This will be a record withdrawal. What will happen if we have another two or three weeks of record cold in late January or early Febuary? We could be in a serious crisis, and this should be priced in at this point as far as I am concerned. I am frustrated at the weather forecasters, since they have been consistently wrong beginning with the hurricane season, and so called warm November, then the so called warmup in late December, and now the so called warm in the beginning of January. The complete opposite has occurred every time. I would be leary of a large warmup late next week with a huge snowpack and low sun angles at this time of year. If it occurs, it will be short lived. I am bullish at this point, but seem to be the only one and realize my opinion does not count. The trend is your friend whether you agree or not.
Its all about keeping people spending money the weather temps on tv are on the high side .everything that comes out of the main stream press is b.s. When people get their heating bills they won't going out that much
Probably the withdrawals will be less than expected. There have been many, many homes without power for many days. This will result in less natural gas being used in areas where natural gas has higher consumption during this time of year. As a result we could see a drop in natural gas prices temporarily. We will see what happens.
you are not the only one. I'm holding a big position on the long side and plan to add more if ng drops. look back to last April. NG was up huge just because of a cold spring. Now it's just the beginning of the winter and the withdraw is so huge. Even all the rest of the winter is normal temp, (is it likely?) the price will not go down big. If there are a few more cold snap, the price will shoot to sky.
I agree with everything you say. The nat gas market is so volatile you can't try and explain the short term pricing from logical point of view. By the end of the heating season pricing will reflect the critically low storage levels and at some point will overshoot to the upside.
This from Natgasweather with respect to the warm up being forcast in mid Jan.....We are becoming more confident that this will likely only be a one week pattern change as we continue to see strong evidence cold air will be lurking over southern Canada and will again sweep into the US around the 14th of January for another surge in nat gas and heating demand for many of the highest use Mid-Atlantic and Northeast states.