Why are natural gas prices going up?
Why are natural gas prices going up?
Go to http://www.weatherbell.com/premium/ and watch the daily update and you will understand why gas prices are going up.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Why are natural gas prices going up?
From The Wall Street Journal:
Natural gas prices surged Tuesday as forecasts turned colder.
Natural gas for January delivery rose 8 cents, or 2.18%, to $3.742 a million British thermal units on the New York Mercantile Exchange. The more heavily traded February contract recently rose 7.2 cents, or 1.96%, to $3.75 a million British thermal units.
Weather models are suggesting a high-pressure ridge will develop over Alaska and send Arctic cold down through the rest of North America in January. That would end a spate of mild temperatures that had caused prices to fall in recent weeks.
About half of U.S. homes use natural gas for heat, making winter weather the biggest driver for demand and often for prices. The recent outlook for colder weather is the latest abrupt change in weather forecasts to whipsaw natural gas prices in recent months.
Commodity Weather Group LLC said Tuesday that “a massive cold pattern setup” for the second weekend in January, but noted that recent forecasts showed a “significant slowing of the incoming colder pattern.”
Market participants are trying to gauge how far temperatures could drop and how long the cold spell might last.
“This market continues to scream higher as it attempts to appropriately discount another blast of Arctic air that will be entering the nation’s midcontinent in force next week,” Jim Ritterbusch, president of Ritterbusch & Associates, wrote in a client note.
Still, he cautioned that the coming blast of cold air might be less severe than cold weather earlier in December: “Unless this renewed cold spell persists for a couple of weeks, we feel that February natural gas values above the 3.75 area will be difficult to maintain.”
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The European weather model for the U.S. (which has been more accurate than the U.S. national weather service model) shows SIGNIFICANTLY COLDER weather across 90% of the U.S. after January 5 through the end of the month. Based on the European model, we could see over 900 Bcf drained from storage in January. The 5-year average draws from ngas inventory during January is 735 Bcf.
Natural gas prices surged Tuesday as forecasts turned colder.
Natural gas for January delivery rose 8 cents, or 2.18%, to $3.742 a million British thermal units on the New York Mercantile Exchange. The more heavily traded February contract recently rose 7.2 cents, or 1.96%, to $3.75 a million British thermal units.
Weather models are suggesting a high-pressure ridge will develop over Alaska and send Arctic cold down through the rest of North America in January. That would end a spate of mild temperatures that had caused prices to fall in recent weeks.
About half of U.S. homes use natural gas for heat, making winter weather the biggest driver for demand and often for prices. The recent outlook for colder weather is the latest abrupt change in weather forecasts to whipsaw natural gas prices in recent months.
Commodity Weather Group LLC said Tuesday that “a massive cold pattern setup” for the second weekend in January, but noted that recent forecasts showed a “significant slowing of the incoming colder pattern.”
Market participants are trying to gauge how far temperatures could drop and how long the cold spell might last.
“This market continues to scream higher as it attempts to appropriately discount another blast of Arctic air that will be entering the nation’s midcontinent in force next week,” Jim Ritterbusch, president of Ritterbusch & Associates, wrote in a client note.
Still, he cautioned that the coming blast of cold air might be less severe than cold weather earlier in December: “Unless this renewed cold spell persists for a couple of weeks, we feel that February natural gas values above the 3.75 area will be difficult to maintain.”
-----------------------------------------
The European weather model for the U.S. (which has been more accurate than the U.S. national weather service model) shows SIGNIFICANTLY COLDER weather across 90% of the U.S. after January 5 through the end of the month. Based on the European model, we could see over 900 Bcf drained from storage in January. The 5-year average draws from ngas inventory during January is 735 Bcf.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group