Storm blusters natural gas to two-week high

Yet another winter storm has brought snow to the US Northeast, offering little respite to dwindling US supplies of natural gas.

Natural gas futures for March surged more than 5.5% to trade above $5500 per million British thermal units (BTUs) by mid-afternoon in New York, with today seeing the highest prices in the contract since 5 February.

We have seen big draws in the amount of natural gas in US storage in recent weeks, as the cold weather has spurred heating demand. Around half of homes in the US use natural gas for heating. The last three reports from the US Energy Information Administration have each shown weekly declines in excess of 200 billion cubic feet of natural gas, taking the total in storage down to 1686 billion cubic feet, well below the five-year average, and I would be expecting another big decline this week.

Winter storm Rex, the eighteenth named storm of this winter’s season, has already swathed the Midwest in snow and freezing rain, and is moving across the US Northeast today, likely to affect Massachusetts, southern Vermont, New Hampshire and Maine, with several inches of snow expected.

Natural gas was only available for electronic trading in New York yesterday because of the market close for US Presidents’ Day, with yesterday’s price movements being counted towards today’s official daily close on NYMEX. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.