The final two weeks of 2015 show why natural gas is one of the most volatile commodities on earth as the spot price rallied higher by .703 or 42% over 6 days of trade.
Winter weather finally arrived to the eastern U.S. quickly reversing market prices which had reached a 14-year low in mid-December.
December temperatures in the U.S. turned out to be the warmest on record shattering the previous record in terms of heating degree days by 15%. Current gas in storage is 3,756 Bcf (billion cubic feet) remains at an all-time high for this time of year.
With roughly 12 weeks to go in this current winter, demand is going to have to increase to keep storage from reaching a withdrawal season high by the end of March. Winter demand is rising as weather forecasts have turned markedly colder particularly in the high usage Midwest and northeastern sections of the U.S.
Natural gas production also fell in the latest EIA report and could be a bullish factor later this year.
Recent strength could have marked a long term low in the natural gas market. A pullback in retest of downside support is now expected but talk of the market setting new lows at this point in the face of increased heating demand seems premature. The first sell off from last week's high should be bought.
If new lows are set in natural gas, it will likely be toward the end of winter which finally appears to be starting.
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