US natgas jumps 5pc to 11-week high on colder February outlook
- Front-month gas futures were up 14.3 cents, or 5%, to $2.993 per million British thermal units.
- On Monday, the front-month settled at its highest level since Dec. 1 after rising over 11%, its biggest daily percentage gain since September.
US natural gas futures jumped 5% to an 11-week high on Tuesday as a major winter snowstorm continued to batter the Northeast and on forecasts for even colder weather and more heating demand in mid-February.
Front-month gas futures were up 14.3 cents, or 5%, to $2.993 per million British thermal units at 8:41 a.m. EST (1341 GMT), putting the contract on track for its highest close since Nov. 13.
On Monday, the front-month settled at its highest level since Dec. 1 after rising over 11%, its biggest daily percentage gain since September.
Commodity traders are watching closely for extraordinary price changes after a series of volatile moves in numerous markets attributed to retail traders using Reddit, a social network. Those traders caused big moves in small stocks like video game retailer GameStop Corp in late January and silver over the past few days, prompting some to wonder whether the "Reddit crowd" was migrating into other fast-moving commodity markets like gas.
Energy traders, however, said they have not heard that Reddit users were having much of an impact on the gas market, but suggested they could have boosted interest in the US Natural Gas Fund (UNG). Volume on UNG hit 10.7 million lots on Monday, its highest daily volume since December.
That compares with a daily average of around 5.1 million lots traded over the past year. Exchange-traded funds are viewed as more vulnerable to herd-like activity than underlying futures contracts. So far on Tuesday, just over 300,000 UNG lots have traded.
Data provider Refinitiv projected average gas demand, including exports, would rise from 127.4 billion cubic feet per day (bcfd) this week to 143.0 bcfd next week as the weather turns colder and heating use increases. That forecast for next week was much higher than Refinitiv's outlook on Monday.
In the spot market, meanwhile, cold weather this week boosted next-day gas at the Dominion South hub in southwest Pennsylvania to its highest level since March 2019.
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