New weather forecasts show thaw in US in late January and early February
NATGAS retreats 6% at the beginning of the week following a weekend winter comeback. This week temperatures will remain low, but towards the end of January and February, there is expected to be a significant thaw in the USA. What is the current situation?
The gas market was additionally motivated for greater volatility due to the tense situation in the Middle East. Some gas carriers had to change their route to Europe, although this does not cause a major problem in the near future. The level of reserves fell below 80% capacity with a 5-year average at 68% for this period. It is expected that at the end of the heating season, the level of storage filling will remain above 50%, which does not give much perspective for growth in the futures market, but of course, large changes can be expected in the spot market in case of further winter attacks.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appIn the United States, just before the weekend, we observed a price increase to 3.3 USD, which, with the maintenance of low temperatures, gave the perspective to rise even to the range of 4-5 USD/MMBTU. On Friday, the price finally increased by 7%, but the spot price rose by 300% to 13 USD/MMBTU. Nevertheless, today we are observing a 6% decrease in the futures price, after the appearance of new forecasts for the turn of January and February. A significant thaw is expected, which can significantly reduce gas withdrawals from storage.
Is there still hope for the bulls? As in previous years, there may be problems with infrastructure in Texas, which is not prepared for extreme frosts. However, a change in weather perspectives would have to occur.
The 6-10 perspective still indicates lower temperatures in the east, but these are not to be very low temperatures compared to the standard. The Midwest is most significant for reserves. Source: NOAA
The price scored a big drop at the beginning of the week, wiping out almost all of Friday's increase. Gas is holding above $3.1/MMBTU at the 61.8 retracement. If this support breaks, gas could then score a correction to 2.94 at the 50.0 retracement level. Holding this support, in turn, will give a chance to test $3.3/MMBTU again before rolling over. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
