Natural gas prices steadily sold off this morning and afternoon, but suddenly rallied in the other direction.  After hitting a high of $3.56 US/mm last Thursday, the NYMEX front month contract’s sell off has taken January down to $3.13 earlier today, but increased suddenly in the afternoon to close at $3.35.  The only possible explanation for the rally (that I’m seeing) is a study just released by the Biden administration, which urges caution when issuing new LNG export permits due to economic and environmental impacts. This news probably just spooked the market, but will probably not have a lasting impact (especially with Donald Trump being in office come January).

Otherwise, everyone agrees that winter was over before it really got started.  Storage is packed, the March/April spread is negative (like spot prices at Waha in Texas), production output is increasing, and the forecast is looking warm.

I must agree with this analysis… but I remind myself everyday (especially when things are going well) that we are talking about natural gas.  I would not be surprised to see low prices this winter, but the important issue will be the path to get there.

I am reminded of the quote attributed to Mark Twain, “The news of my death is greatly exaggerated.”  This winter is not over yet and I fully expect at least one severe cold snap like we had last January when Dawn Daily Index hit $12.58 CAD/GJ over a weekend. 

[WFG]