Feb ng closed today

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Fraser921
Posts: 2953
Joined: Mon Mar 22, 2021 11:48 am

Feb ng closed today

Post by Fraser921 »

More fun and games

Traders had to buy to cover their shorts

The contract was at 2.925 at 2:22. 8 minutes later it closes @ 3.155 up 23 cents!

The March contract was flat on the day while the Feb was up 21.1 cents!

Crazy
Fraser921
Posts: 2953
Joined: Mon Mar 22, 2021 11:48 am

Re: Feb ng closed today

Post by Fraser921 »

Feb manipulated up to 3.15 on close, 3 days later March at 2.47!
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Feb ng closed today

Post by dan_s »

Here is what is happening:
> The natural gas price you see every day is the front month NYMEX futures contract. The average physical or "spot price" in most regions is much higher. The West Coast spot market natural gas price now near $10.00.
> Paper Traders cannot hold NYMEX contracts until the expiration date because they are not able to take physical delivery of the gas. As each month's contract gets closer to the expiration date, the Paper Traders are forced to take any price. The utilities and LNG exporters love the current situation. They can just sit back and wait until the last minute to pick up very cheap gas.
> Utilities now believe that they have enough gas in storage to meet demand for February and March, so they are no longer in the "bidding war" for NYMEX futures contracts. Like any market, when the "Sellers" exceed the "Buyers", the Buyers control the price.
> Natural gas doesn't go into storage just because supply exceeds demand; it is sent to a storage location by the owner of the physical gas. There are storage fees that can get expensive if the gas is not moved out of storage quickly.

Unlike the global oil market where there are always buyers and tankers that can take crude oil to them, the U.S. natural gas market is still a "stranded market" because export capacity is not enough to take excess supply to buyers in Europe or Asis that are still paying $17 to $20 per MMBtu. We don't even have the pipeline capacity to take excess West Texas gas to the West Coast where spot market prices have been over $10 per MMBtu since mid-December. BTW this is why Freeport being offline is the main reason for today's low natural gas price.

If you look at the NYMEX strip, the JAN24 contract closed at $4.25 today, so upstream companies can lock in that price today for Q1 2024. That tells me that when this situation with Sellers exceeding Buyers is worked out, $4 is a more realistic price for natural gas. I expect that natural gas prices will get a nice boost when Freeport actually ramps up to full export capacity.

Go to this link https://tradingeconomics.com/commodity/natural-gas and run a 25-year chart of the natural gas price, which is a 25-year chart of the front month NYMEX futures contract price. What you will see is that the price spikes are mostly in the months leading up to the winter heating season. Why? because that is when the utilities start to panic and need to build up their physical inventories before winter arrives. This puts the Paper Traders in control of the commodity price.
Dan Steffens
Energy Prospectus Group
ChuckGeb
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Joined: Thu Nov 21, 2013 2:46 pm

Re: Feb ng closed today

Post by ChuckGeb »

It’s really hard to believe the beating Freeport LNG,its insurance companies and shareholders are taking at the hands of the Biden administration to keep heating costs over the winter. It would seem that any incident or excuse to regulate them out of business will be exercised by Biden’s bunch. I don’t know what new builds are scheduled to come on stream before 2025 but I would wager they won’t come on as planned during this period.
Fraser921
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Joined: Mon Mar 22, 2021 11:48 am

Re: Feb ng closed today

Post by Fraser921 »

Good explanation and comments
ChuckGeb
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Joined: Thu Nov 21, 2013 2:46 pm

Re: Feb ng closed today

Post by ChuckGeb »

How do you commit to billions of dollars of capital just to build a LNG plant when you are regulated by a government that would blow up the Nordstream pipeline to accomplish its objectives?
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