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US NatGas Prices Bounce After Monthlong Selloff; Some Forecasters See Possible Cold Flip End Of Month

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US NatGas Prices Bounce After Monthlong Selloff; Some Forecasters See Possible Cold Flip End Of Month

US natural gas futures surged from an 18-month low and major support level. Energy prices as a whole rose on the prospects China's move to reopen would boost imports and outweigh global recession fears. Long-term weather models indicate the possibility of a return to winter for the Lower 48 later this month into next, while near-term outlooks still show mild temperatures. There's no concrete evidence yet of a flip from mild to colder temperatures for the US that would boost heating demand. 

Front-month NatGas futures for February delivery jumped more than 10% to above $4 per million British thermal units (mmBtu). The snap higher in price (possibly a short squeeze) occurred just above the 76.4% Fibonacci retracement on the 2020 run-up from $1.43 to $10 in August. Since late last summer, prices have slid nearly 65% on abundant supply, mild winter, and LNG export troubles due to Freeport delays. 

Comparing NOAA's latest 6-10 day weather outlook versus the 8-14 day outlook, there are signs cold weather could be ahead for the West Coast and Rocky Mountains while the eastern half of the US stays above average. 

There's some chatter on social media about longer-term outlooks pointing to much colder weather for the Lower 48 later this month into next (remember, we pointed out some of these forecasts last week). 

However, Houston-based energy firm Criterion Research said warmer trends would persist across the Lower 48 for the next two weeks. They also said there's a possibility of a weather event at the end of the month of early February.

As for Freeport's restart, it's anyone's guess, but here's some commentary around the latest aerial drone photos of the LNG export facility and what one trader thinks the reopening timeframe could be in early March. 

Hard to pinpoint precisely why NatGas jumped today. Maybe a combination of China reopening, a short squeeze, and or the idea winter isn't over. 

Tyler Durden Mon, 01/09/2023 - 18:40

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