Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
James Hyerczyk
Natural Gas

Natural gas futures are trading lower on Tuesday shortly after the regular session opening. The lack of follow-through to the upside following Monday’s rally is likely behind the selling pressure. Yesterday, prices rose after expected weekend weather shifts failed to materialize, encouraging shorts to cover their speculative positions. Some traders were looking for a gap-lower opening, and when the market opened steady, they covered their short positions.

At 13:10 GMT, February natural gas is trading $2.283, down $0.043 or -1.85%.

Natural Gas Intelligence (NGI) had another spin on Monday’s price action. Its analysts said Monday’s gains had nothing to do with long-range weather outlooks.

“Instead, tighter balances, a potential short squeeze and strong cash prices from a double-barreled winter storm moving across the United States likely combined to send the January Nymex gas futures contract soaring,” NGI analysts wrote.

Short-Term Weather Outlook

According to NatGasWeather for December 16 to December 22, “Demand will increase early this week as a cold shot with rain and snow sweeps across the northern and central U.S., coldest across the Midwest and Northeast with lows of -10s to 20s. It will be warm Monday from South Texas to the Southeast with highs of upper 60s to 80s for light demand, but cooling Tuesday thru Thursday as a cold front pushes through. Reinforcing cool air will continue across the Northeast late in the week with highs of 20s to 40s, while the rest of the country is expected to warm above normal with highs of 40s to 70s. Overall, demand increasing to high Tuesday through Thursday, then back to moderate or low this weekend into next week.”


Daily Forecast

It looks like you can throw all those possible reasons for Monday’s rally out the window since the market is trading lower on Tuesday.

NatGasWeather said on Monday, “But as far as U.S. weather patterns, they’re as bearish as they have looked in more than a month, and it will take either much colder trends or better prospects of cold returning at the end of December or the start of January if bearish weather headwinds are to cease.”

If there is a turnaround in the market then pick a reason for the move. They could range from a spike in cash prices to a short-squeeze due to oversold futures to a notable drop in production.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.