U.S. summer natural gas briefly trades over winter despite current freeze

Value Exchange International

21/01/2022 16:29

Jan 21 (Reuters) - The United States is experiencing the
coldest weather of the winter this week, which should boost
natural gas demand to a record high on Friday, but summer gas
futures briefly traded over winter futures as the market starts
to look to the next season.
    Despite the frigid weather, U.S. natural gas futures dropped
about 8% this week because the latest forecasts called for
warmer weather over the next two weeks than previously expected.
 NGA/ 
    Those changes in weather forecasts caused gas futures for
April 2022 to briefly trade over March 2022  NGH22-J22  on
Thursday and Friday for the first time since the contracts
started trading in 2009.
    March is the last month in the gas industry's winter storage
withdrawal season and April is the first in the summer storage
injection season.
    "Summer traded over winter!!!," Robert Yawger, executive
director of energy futures at Mizuho, said in a report, noting
the unusual trade.
    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.
    That is a massive narrowing of the spread, which hit a
record $1.80 in early October when the markets worried about
tight U.S. gas supplies during the winter because stockpiles
were more than 6% below normal and output was slipping.
    Now, however, U.S. inventories are about 1% above normal for
this time of year after record output and mostly mild weather in
December.  EIA/GAS   NGAS/POLL 
    Cold temperatures for the rest of January, however, were
expected to cause those stockpiles to slip below normal levels
again in coming weeks as homes and businesses crank up their
heaters.
    The market uses the March-April spread to bet on the winter
heating season when demand for gas peaks.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
UPDATE 1-U.S. natgas pares gains, still at 7-year high as global
prices soar     urn:newsml:reuters.com:*:nL1N2QU14C
Winter worries vanish, as the widow maker strikes again    https://tmsnrt.rs/31gWdYI
UPDATE 2-Winter is coming. The U.S. natgas market no longer
cares.     urn:newsml:reuters.com:*:nL1N2SM1PM
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Scott DiSavino
Editing by Paul Simao)
 ((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))