Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Natural Gas: Freezing Cold Or Not, Rollercoaster Prices Are Here

By (Barani Krishnan/ 20, 2022 08:57
Natural Gas: Freezing Cold Or Not, Rollercoaster Prices Are Here
By (Barani Krishnan/   |  Jan 20, 2022 08:57
Saved. See Saved Items.
This article has already been saved in your Saved Items

It isn’t called one of the world’s most volatile markets for nothing, though some might argue that Bitcoin or even the NASDAQ these days, deserve that honor more.

Whatever the case, one of the most bewildering market plunges associated with peak demand period for winter heating occurred last week.

In that narrative, natural gas futures lost 12% right after the US government reported on Jan. 13 that utilities in the country burnt up the largest amount of gas in almost a year to help keep homes and buildings warm amid freezing temperatures.

What was more perplexing about that tumble was that it came after gas futures on New York’s Henry Hub jumped 14% just one day prior, in anticipation of a 173-billion cubic feet (bcf) drawdown from storage forecast by industry analysts for the week ended Jan. 7. Utilities actually did slightly better, drawing down 179 bcf in what was the largest weekly draw since February 2021.

If the Jan. 13 plunge was surprising, consider this: Henry Hub futures tanked 6% yesterday, after forecasters predicted that the US Energy Information Administration will report a 194-bcf drawdown from storage for last week in the weekly data update it will provide today.

US Gas Storage
US Gas Storage

Source: Gelber & Associates

“The vestige of renewed volatility that was sewn into market early this week remains,” Dan Myers, analyst at Houston-based gas markets consultancy Gelber & Associates, said in a Jan. 14 note to the firm’s clients after the stunning rollercoaster ride that saw a 14% surge one day and a 12% dump the next.

At yesterday’s close, Henry Hub’s front-month stood at $4.03 per million thermal units, down 17% from the Jan. 12 peak of ​​$4.88.

Sunil Kumar Dixit, chief technical strategist at, said gas prices could be headed a little lower based on chart action, notwithstanding the push higher than storage draws normally provide. The back-and-forth indicates more volatility ahead as Gelber’s Myers suggested.

If the 50-week Exponential Moving Average of $3.963 on Henry Hub’s spot month holds, a short-term bounce towards the previous week's close of $4.332 and the weekly middle Bollinger Band of $4.750 may be seen, Dixit said.

“But weakness below the 50-week EMA of $3.963 may push gas prices lower towards the horizontal support of $3.68 and the 100-week Simple Moving Average of $3.050,” he added.

With colder January weather hitting the US Northeast—the primary market for gas-fired heating in the US—physical gas prices were exploding higher and eventually this will have an impact on Henry Hub futures, said Myers.

“For instance, Iroquois Zone 1 is trading at nearly $10 while Algonquin City-Gates, which is a basis point exposed to the international markets, is trading at $15. For reference, the Henry Hub spot price is currently noted to be $4.48,” he said.

The higher physical prices, Myers said, have justified higher Canadian gas imports into the US.

“These basis points work to increase their local supply base in the midst of cold temperatures and higher regional natural gas demand." 

“Canadian imports week-over-week have increased by around 0.7 bcf/daily as a result. Other national natural gas indicators also showed growth—with LNG and Mexican exports increasing by a full bcf over the last week and production also displaying a week-on-week growth of 0.2 bcf per day. In the face of more inclement weather, both supply and demand grew alongside each other."

US Temperature Map
US Temperature Map

Source: Gelber & Associates

With colder temperatures expected through January, withdrawals were expected to grow in size, with the next two weeks’ storage reports offering 200+ bcf withdrawals, Myers said.

“These strong withdrawals are expected to drop 2022 storage below the five-year average and into the underside of the five-year range. An average to mild February will be necessary in order to prevent 2022 storage from increasing the impending deficit between itself and the five-year average," he added.

Forecaster NatGasWeather said the American weather model followed by gas traders was “not quite as cold as Jan. 28-Feb. 2,” though it “remained quite cold late this week and again Jan. 26-28 for very strong national demand."

“Both the domestic and European models still forecast the coldest/best 15-day pattern so far this winter season as lows of minus 20s to 20s impact much of the northern two-thirds of the US, including anticipated freeze-offs of several bcf/day to production,” NatGasWeather said in a report carried by industry news portal

It said more disruptions to output or changes in demand could further lower daily supply levels.

“However,” added NatGasWeather, “price is king and the natural gas markets are clearly stating they don’t view the coming pattern as cold enough to justify” prices near $4.30, a level Henry Hub’s prompt month approached on Tuesday.

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables. He does not hold a position in the commodities and securities he writes about.

Natural Gas: Freezing Cold Or Not, Rollercoaster Prices Are Here

Related Articles

Natural Gas: Freezing Cold Or Not, Rollercoaster Prices Are Here

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
An Sab
An Sab Jan 20, 2022 18:14
Saved. See Saved Items.
This comment has already been saved in your Saved Items
sir pleas give me a 100 dollar really need it
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email