Natural gas futures experience heightened volatility as weather forecasts signal a significant shift towards colder temperatures, driving substantial price movements amid supply concerns and changing trading positions. After an impressive rally yesterday the price is slighlty lower today.
Key Market Statistics:
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Open account Try demo Download mobile app Download mobile app- Current Price: $3.82 (-3%)
- Session High: $4.201 (52-week high)
- Previous Session: +15%
- YTD Performance: +58%
Weather Dynamics
Updated forecasts from The Weather Co. and Atmospheric G2 project below-average temperatures across the eastern United States from Florida to Maine in January. The cold snap's peak is anticipated mid-month, with AccuWeather warning of potential "substantial snow and ice" conditions. This marks a significant departure from the relatively mild autumn and early winter pattern.
Meteorologists expect significant cooling on the East Coast with a near 95% probability. These below-normal temperatures are expected to persist until at least mid-February. Source: Bloomberg Financial LP
Supply and Production Risks
Industry analysts, including John Kilduff of Again Capital, warn of potential "freeze offs" that could disrupt natural gas production flows, particularly in the Marcellus Shale region. This threat comes as storage levels have normalized to just 5% above the five-year average, down significantly from the 40% surplus observed last winter.
Trading and Market Sentiment
Algorithmic trading funds have shifted from flat to net long positions, reflecting growing bullish sentiment. The February contract's recent surge marked its largest daily gain since its 2012 inception, highlighting the market's sensitivity to weather-driven demand expectations.
LNG Export Outlook
Additional demand pressure stems from expanding LNG export capacity, with Cheniere Energy's Corpus Christi and Venture Global's Plaquemines facilities ramping up operations. This comes as global LNG exports saw their slowest growth since 2015, potentially supporting prices amid tight market conditions.
NATGAS (Interval D1)
The price of the commodity is currently trading above the 61.8% Fibonacci retracement level. The RSI is cooling off after nearing overbought levels, a pattern that has historically preceded potential upward movements. The MACD indicates strong bullish divergence, reinforcing the possibility of continued bullish momentum.
The 30-day EMA is positioned above the 23.6% Fibonacci retracement level, offering a strong support zone for bulls. For bears, this level could act as a significant target, signaling a potential shift if breached. Source: xStation
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