Natural gas down 7%, correcting as potential polar vortex dawns

NG
+1.59%

Add to/Remove from Watchlist

Add to Watchlist

Add Position

Position added successfully to:

Please name your holdings portfolio

Type:

BUY
SELL

Date:

Amount:

Price

Point Value:

Leverage:

1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000

Commission:

Create New Watchlist
Create

Create a new holdings portfolio
Add
Create

+ Add another position
Close

By Barani Krishnan

Investing.com — The first likely polar vortex in four years might be just a week away, but natural gas still returned to a sell-off mode on Wednesday with players taking profit and attempting to correct a market that had jumped almost 30% over the past five sessions.

Natural gas for January delivery on the New York Mercantile Exchange’s Henry Hub settled down 50.5 cents, or 7.3%, at $6.43 per metric million British thermal units.

The benchmark gas contract had gone from a six-week low of $5.34 on Dec. 6 to a two-week high of $7.10 on Dec. 13, triggering the profit-taking and correction.

“With only a little over a week to go before a massive polar vortex plunges into the U.S. and overspreads most of the nation with bitter cold, ice, and snow; NYMEX front-month gas futures are selling off this morning with prices oscillating in the $6.50s/mmBtu,” Houston-based energy consultancy Gelber & Associates said in a note on natural gas.

Gelber noted that January gas rose 34.8 cents to close Tuesday’s session at $6.935. “While that was a hefty gain, it was clear there was a force fighting for prices not to climb above $7.11/mmBtu,” it added.

Traders said Wednesday’s market reversal was notable because the oncoming Arctic winter blast was likely to be the coldest for a December since 2010.

The last polar vortex occurred in 2014. Weather records show similar cold outbreaks prior to that, including several notable freezes in 1977, 1982, 1985 and 1989.

Ahead of Thursday’s weekly gas storage update from the Energy Information Administration, or EIA, analysts tracked by Investing.com expected US utilities to have pulled a 45 billion cubic feet from stockpiles during the week ended Dec. 9, versus a draw of 21 bcf in the prior week to Dec. 2.

Source: Investing.com