Four Consecutive Sessions of Losses for Natural Gas
Natural gas is dipping as warm weather sets in and more warm weather is expected in the United States.
Quick overview
- Natural gas futures in the U.S. fell to $3.39 USD/MMBtu, continuing a four-session losing streak due to warmer weather forecasts.
- The market is experiencing an unexpected bear trend as milder weather is predicted across the eastern U.S. this week.
- Venezuela's political situation may impact U.S. trade, as the new interim government seeks to release former President Maduro, complicating access to the country's vast natural gas reserves.
- Despite current low prices, analysts anticipate an uptick in natural gas prices as colder weather is expected later in the winter season.
Natural gas futures in the United States continued their four-session losing streak on Tuesday to $3.39 USD/MMBtu as weather forecasts called for slightly milder and warmer patterns to emerge in the coming week.
On Tuesday, natural gas dipped 3.67% and started day four of a bear trend that was unexpected this late in the winter season. New forecasts for the week are calling for slightly milder weather to progress through the eastern parts of the United States starting from Wednesday and continuing until Sunday the 11th.
Warmer weather is also expected to move through the central and northern parts of the States from January 12th until the 16th. At the same time, the analysts and investors are attempting to process the ramifications of the arrest of Venezuelan President Nicolas Maduro. This could open the oil market there to neighboring countries and make it easier for the United States’ trade partners to obtain oil in the region.
A Change in the Region
The new Venezuelan government led by interim president Delcy Rodriguez has already called for the release of Maduro, and many of Maduro’s allies are still in charge there. That could create some hindrances for the U.S. and its partners as they try to open up trade with Venezuela.
Venezuela is sitting on 200 trillion cubic feet of natural gas, which accounts for about 73% of all the natural gas in South America. They are a very attractive trade partner for any nation that is looking to increase its natural gas reserves, especially during the winter months when supplies tend to run low.
An upside is expected for the natural gas market, as more than half of the winter season remains. Forecasters expect cold weeks ahead that should result in higher prices for gas futures. The market is showing signs of fatigue in waiting for cold weather. This has, for the most part, been an unusually warm winter and not quite what the market expected. Gas reserves have fallen from historic highs, but the reserve levels still remain elevated from months of slow usage and heavy injections.
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