A violent few sessions back and forth 12 cents
U.S. Gas Bulls Stick to Their Bets With Supply Deficit to Grow By Naureen S. Malik (Bloomberg)
U.S. natural gas bulls say the worst start to a year since 2006 won’t last given a supply deficit that looks set to widen. Seven of nine analysts and traders surveyed by Bloomberg expect prices to rebound after prices plunged this week as a result of an abrupt change in weather forecasts. A cold snap sweeping the lower 48 states will give way to above-normal readings from Jan. 10 through Jan. 19., according to MDA Weather Services.
With production down and exports on the rise, demand for the heating fuel will likely pick up from next month in comparison with unusually mild conditions a year ago. Another cold snap would further dent stockpiles, a dramatic turnaround from last winter when a massive supply surplus sent prices to a 17-year low in March. “We’ve gone too far,” said Teri Viswanath, managing director for natural gas at PIRA Energy Group in New York. “
We’ve already factored in a lot of the warmth for January and when you start to look at the comparison for February and March, it starts to look more constructive.” The gas market probably lost about 2.5 billion cubic feet a day of demand with the change in the January weather forecast, she said. In the next two months, demand growth may be 6 billion cubic feet a day above year-earlier levels, she said.
Gas futures slumped 12 percent so far this week to $3.273 per million British thermal units on the New York Mercantile Exchange. That’s the steepest loss for the start of any year going back to 2006.