Soaring global natgas prices boost U.S. widow maker spread to record

Value Exchange International

28/09/2021 15:14

Sept 28 (Reuters) - U.S. natural gas prices soared to
multi-year highs, boosting the March-April spread to record
levels as insatiable demand in Asia and worries about low
storage in Europe keep U.S. liquefied natural gas exports
strong.
    The premium of futures for March over April  NGH22-J22  rose
to a record $1.57 per million British thermal units (mmBtu) on
Tuesday as all of the U.S. winter contracts from October
2021-March 2022 hit all-time highs.
    "Overall, this is going to be a crazy winter if it is
anything but warm globally," analyst Paul Sankey of Sankey
Research said in a note.
    The gas industry calls the March-April spread the "widow
maker" because rapid price moves resulting from changing weather
forecasts have knocked some speculators out of business,
including the Amaranth hedge fund, which lost over $6 billion on
gas futures in 2006.
    In addition to the March-April spread, the premium of
futures for November 2021 over October 2021  NGV21-X21  also
rose to a record high on Tuesday.
    The market uses the March-April and October-November spreads
to bet on the winter heating season when demand for gas peaks.
    The entire global energy complex was trading at multi-year
highs on Tuesday on concerns supplies and production may not
keep pace with forecasts for demand to grow this winter.
    Oil prices  CLc1   LCOc1  were at their highest since
October 2018, while global gas prices were at record levels
around $29 per mmBtu in Europe  TRNLTTFMc1  and Asia  JKMc1 
versus just around $6 in the United States.  O/R   NGA/ 
    With global gas prices trading over four times higher than
in the United States, energy traders said buyers around the
world would keep purchasing all the LNG the United States could
produce. The United States exports about 10% of the gas it
produces as LNG.

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UPDATE 1-U.S. natgas pares gains, still at 7-year high as global
prices soar     urn:newsml:reuters.com:*:nL1N2QU14C
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 (Reporting by Scott DiSavino; Editing by Mark Porter)
 ((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters
Messaging: scott.disavino.thomsonreuters.com@reuters.net))
 
((For Refinitiv, formerly known as Thomson Reuters Supply Chain & Commodities Research (SC&CR), see: cpurl://apps.cp./cms/?pageid=usa-gas))