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The price of gas moves up and down, following the weather forecastDec 15, 2019 07:12
We are now at the beginning of the winter season in the natural gas market. Over the past years, price volatility has increased going into the winter months. The uncertainty of the demand for heating tends to peak around this time of the year.
Natural gas rose to just over the $2.90 per MMBtu level in early November on the back of forecasts for cold weather conditions across the United States. The early cold snap caused buying. Warmer forecasts over the coming week resulted in a correction.
At this time of the year, it is Mother Nature who is in charge of the path of least resistance for the price of natural gas. The energy commodity will be highly sensitive to the ever-changing weather forecasts over the coming weeks, and the price action will be as fickle as the season.
"We are heading into the winter season in the natural gas market, and we should see volatility increase as the price moves higher and lower with the weather forecasts over the coming weeks. I continue to believe that at the $2.70 per MMBtu level at the end of last week, the risk-reward continues to favor the upside. I expect at least one move to $3 per MMBtu or higher on the peak winter season January futures contract. The January futures contract settled at $2.75 per MMBtu level on Friday, November 15. The odds continue to favor $3 versus $2.50 for the coming week. Keep an eye on that island reversal. Natural gas needs to fill the void up to the $2.753 level to avoid further selling over the coming sessions. At this time of the year, it’s all about the weather in the natural gas futures arena", said Andrew Hecht, a sought-after commodity and futures trader, an options expert and analyst.
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