Natural Gas Price now over $4.00/mcf

[dan_s]

The NYMEX futures contracts for natural gas, both December and January, have moved over $4.00/MMBtu. January is now trading at $4.07.

I have to say here that "I told you so" several months ago. When I made the prediction that we'd see $4.00 gas this year at our September luncheons I know that some of the attendees thought I was crazy. However, I have been tracking natural gas supply & demand for many years and I have never seen the U.S. market this tight heading toward winter. The "consensus" has been that low gas prices are here to stay because the Wall Street Gang believes everything that EIA tells them to believe. Sometimes "facts" do matter. Natural gas prices are set on regional markets and this regions is SHORT ON GAS SUPPLY.

This price spike has happened a month earlier than I expected. I now believe that we will see a BIG DRAW from U.S. natural gas storage for the week ending November 16. The 2nd week of November is usually a small build in storage with draws starting the 3rd week of November. Mother Nature decided to start winter earlier this year. (Remember that storage reports are a week behind, so the report that comes out on Thursday will be for the week ending November 9th and it may show a small build.)

There is a BIG SNOW STORM that will be dumping up to a foot of snow on some areas in the Northeast coming in the next few days.

Watch the daily updates on the weather here: https://www.weatherbell.com/premium/

Dr. Joe was forecasting a mild warm-up the week of Thanksgiving, but now he is backing off that forecast and saying it will stay slightly colder than normal across the eastern 2/3rds of the U.S. and then turn MUCH COLDER in December. If we have a colder than normal December in the eastern 2/3rd of the U.S. we may see the January NYMEX contract push over $5.00/MMBtu.

LET ME BE CRYSTAL CLEAR: This spike in gas prices is the result of a "Bidding War" that is just beginning between the major utilities. They MUST maintain pressure in the residential gas delivery systems and they are fearful that they will run out of supply. We will probably see double digit spot market prices for gas. However, these high prices will only carryover into April if we have a colder than normal winter that drains storage to below 1,000 Bcf. If U.S gas in storage dips below 2,600 Bcf by December 31st there is a good chance that this will happen. A cold first quarter would likely cause regional shortages, so buy some firewood if you live in the Great Lakes Region.

[dan_s]

Now read this: https://www.barrons.com/articles/natura ... yptr=yahoo