Natural gas tumbles beneath $4 as warm January takes hold of U.S.

By Barani Krishnan

Investing.com -- The gas bull just can’t seem to catch a break, even with the New Year here, as a warmer January portends for the United States after an already mixed 2022/23 winter start for the primary heating fuel.

Natural gas futures on the New York Mercantile Exchange’s Henry Hub continued their journey into the abyss of low pricing on the first trading day of 2023, breaking below the key $4 per mmBtu, or million metric British thermal units, support. The hub’s front-month, February, settled at $3.9880 per mmBtu, down 48.70 cents, or almost 11%, on the day.

The jaw-dropping plunge has left “natty”, as it’s known in the trade, down 40% from its December peak of above $7 and 60% below the August high of over $10.

“NYMEX front-month natural gas futures are kicking off the New Year in notably bearish territory,” Houston-based energy markets consultancy Gelber&Associates said in a note on natural gas.

“After the bitterly cold late December winter event, the Polar-chilled jet stream quickly transitioned to a high-pressure ridge, which the major weather forecast models, including the (U.S.) Global Forecast System (GFS) and the European (system) (ECMWF), suggest will be stubbornly footed in place through at least mid-January and will crater demand.”

Natty managed to finish 2022 up by 22% — as ironic as that seems — as bulls played on the psyche of a market caught undersupplied in an extreme winter. Neither of those two superlatives came to fruition — storage of U.S. natural gas ended 2022 little changed from 2021 closing levels while the 2022/23 winter has mostly felt like an extension of autumn, albeit a little warmer.

Europe's wholesale natural gas prices also fell Monday to their lowest level since their record highs after Russia invaded Ukraine in late February 2022.

A mild winter has enabled European Union countries to tap less gas from stocks that were built up in anticipation of cuts in supplies from Russia, which was the E.U.’s main supplier before the war.

The benchmark  European gas contract — Dutch TTF gas futures for the coming month — soared to a record $367 per megawatt-hour in March and was as high as $364 in August. On Monday, it hit $77 — 50% down from a month ago and the lowest level since before the war on February 21.

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.8% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services (UK) Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

www.onefinancialmarkets.com is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: